State Partially Guaranteeing Bank Loans for Germany's Military Expansion: Assertion by Deutsche Bank Head, Sewing
Germany's Defense Spending: The Deutsche Bank's Take on State Guarantees for Defense Loans
Christian Sewing, CEO of Deutsche Bank, has advocated for partial state guarantees on bank loans to defense companies in a guest commentary for the "Handelsblatt". This suggestion comes as the global military spending continues to rise and is projected to reach around $2.72 trillion in 2024.
To better serve the defense sector, Deutsche Bank has created a special team focused on small and medium-sized enterprises in this field. According to Sewing, the financing potential of banks could be maximized through the combination of guarantees or similar instruments from public institutions when necessary.
Banks and investors are prepared to support the defense sector, with Deutsche Bank's credit portfolio in the defense industry amounting to a mid-three-digit billion figure. Sewing believes that the current economic boom in the arms industry can be better leveraged if bank loans to defense companies are partially guaranteed by the state.
Sewing cites the European Investment Bank's (EIB) successful mobilization of around €186 billion in investments during the pandemic with €24 billion in guarantees as a promising model. He suggests that similar mechanisms could be applied to defense, proposing ideas like a special bank for defense, security, and resilience in the EU.
As military spending increases for the tenth consecutive year in 2024, reaching $2.72 trillion (approximately €2.38 trillion), Germany's defense spending is also on the rise. Germany spent $88.5 billion (€77.6 billion) on the military in 2024 - 28 percent more than the previous year.
While there are no specific policies currently in place for state guarantees on defense loans in Germany, the aligning of Deutsche Bank's views with Germany's broader defense strategy suggests a supportive environment for such initiatives. However, it's crucial to balance this potential financial support against fiscal prudence and broader market risks.
In essence, while specific proposals for state guarantees on defense loans are not yet in place, Deutsche Bank's stance reflects a broader trend towards increased investment in defense, which could lead to future discussions around state-backed financial instruments. The streamlined and efficient combination of public and private capital could prove essential in financing the expansion of defense capacities in the coming years.
- What? Christian Sewing, the CEO of Deutsche Bank, suggests partial state guarantees on bank loans to defense companies.
- The funds for defense sector may be boosted as Deutsche Bank has proposed combining guarantees from public institutions with bank loans.
- In the German language, Deutsche Bank is known as 'deutsche'.
- Sewing's suggestions seem to follow a trend in the industry, as he proposes a special bank for defense, security, and resilience, similar to the European Investment Bank's model during the pandemic.
- The global military spending is projected to reach $2.72 trillion in 2024, and Germany's defense spending is also increasing, amounting to $88.5 billion in 2024.
- The aligning of Deutsche Bank's views with Germany's defense strategy indicates a supportive environment for state guarantees on defense loans, but it's important to consider fiscal prudence and broader market risks before implementing such policies.
