Europe’s Public Banks Unite to Boost Investment in Defence and Security Sectors

In a strategic move aimed at reinforcing Europe’s resilience and preparedness amid evolving global security threats, six of the continent’s foremost public financial institutions have agreed to deepen cooperation on investment in the security and defence sectors. This landmark accord was reached in Warsaw during the CEO meeting of the European Association of Long-Term Investors (ELTI), hosted by Poland’s national promotional bank, Bank Gospodarstwa Krajowego (BGK).

The cooperation brings together the national promotional institutions of France (Caisse des Dépôts), Germany (Kreditanstalt für Wiederaufbau - KfW), Italy (Cassa Depositi e Prestiti - CDP), Poland (BGK), Spain (Instituto de Crédito Oficial - ICO), and the European Investment Bank (EIB). Collectively, these six long-term investors have committed to explore joint initiatives aimed at bolstering Europe’s defence capabilities, industrial strength, and strategic autonomy.

A Unified European Investment Strategy

At the core of this initiative is a shared recognition that current geopolitical dynamics demand a coordinated and sustainable investment response to enhance Europe’s security infrastructure. The agreement outlines a broad cooperation framework to promote:

• Research and Development (R&D) in defence technologies

• Expansion of industrial production capacity for defence-related goods

• Modernization of strategic infrastructure, including dual-use technologies

• Advisory support and the development of new financial instruments

By pooling expertise and resources, the six institutions aim to catalyze investment flows into critical sectors while respecting national prerogatives and the EU’s common security objectives.

Beyond Borders: A Pan-European Model

Although initiated by five major EU economies and the EIB, the partnership is explicitly open to additional European long-term public investors, particularly other national promotional institutions (NPIs). The inclusive nature of the agreement signals a collective pan-European effort to reinforce the continent’s strategic autonomy, making it more self-reliant in terms of defence capabilities.

The Warsaw meeting and subsequent agreement mark a departure from siloed national strategies and emphasize cross-border cooperation and financial solidarity. This approach aligns with recent European Commission calls for stronger defence investment coordination and mirrors broader EU goals such as the Strategic Compass and the European Defence Fund.

Rising to the Challenge of Geopolitical Uncertainty

In recent years, the EU has faced a series of unprecedented geopolitical challenges—from Russia’s invasion of Ukraine to energy security disruptions and evolving hybrid threats. These developments have underscored the urgent need for long-term investments in both military and dual-use technologies.

The participating NPIs and the EIB have acknowledged that financial institutions must play a more active role in financing Europe’s strategic security interests, without compromising environmental, social, and governance (ESG) principles. To this end, discussions are also likely to include the design of financing frameworks that align defence investments with sustainability standards.

Financial Instruments and Future Collaborations

The cooperation initiative also aims to explore innovative financial products, such as:

• Blended finance mechanisms combining public and private capital

• Guarantees for defence-related SMEs and supply chains

• Thematic bonds for dual-use technology and cyber defence

• Structured investment vehicles targeting infrastructure resilience

Furthermore, the group plans to develop joint advisory services to guide project development and ensure alignment with EU regulatory standards, particularly in areas related to procurement, security compliance, and environmental impact.

A Strategic Pillar for the EU’s Long-Term Security

This agreement is not just a financial compact; it is a strategic pillar underpinning Europe’s long-term defence posture. By acting in concert, national promotional banks and the EIB can leverage their capital, networks, and policy alignment to deliver impactful results where market-driven finance may fall short.

The agreement complements existing EU mechanisms such as the European Peace Facility, Permanent Structured Cooperation (PESCO), and the European Defence Industrial Development Programme (EDIDP)—strengthening the EU’s capacity to respond to both conventional and emerging threats.

A Milestone for Europe’s Defence Sovereignty

The decision by six leading public financial institutions to join forces in support of Europe’s security and defence is a landmark step toward realizing the EU’s ambition of becoming a credible, self-sufficient geopolitical actor. With national promotional institutions and the EIB working in tandem, Europe can expect a more unified, better-financed, and strategically focused response to security challenges.

As the initiative grows to include more European partners, it is poised to become a cornerstone of a new era in European defence investment policy—one that balances security imperatives with long-term resilience and sustainable development.