CIBC commits $2-billion to help finance defence-related companies

Canadian Imperial Bank of Commerce CM-T is committing $2-billion over five years for small and medium-sized defence-related and dual-use businesses in Canada as Ottawa spends to boost the country’s military base.

While the tightly regulated banking sector has typically shied away from lending to riskier small and medium-sized defence companies, that approach has been changing alongside the federal government’s efforts to diversify away from dependence on the U.S. Some of Canada’s biggest banks have been ramping up efforts to expand services to the burgeoning sector.

The businesses eligible for CIBC’s program range across sectors deemed critical to Canada’s economy, including infrastructure, energy, cybersecurity, digital capabilities and advanced technologies.

“Our $2-billion commitment reflects our confidence in Canadian businesses and our determination to help them access the financial support they need to scale and succeed,” CIBC chief executive Harry Culham said in a statement.

Opinion: In this new world, defence strategy is now economic strategy

Eric Reguly: Defence spending is surging. It’s unaffordable and won’t last

The announcement is the latest move among Canadian banks expanding into the defence sector.

Royal Bank of Canada RY-T is launching a $1.4-billion fund aimed at investing in Canadian technology companies, including aerospace and dual-use defence companies.

Bank of Nova Scotia BNS-T is planning to issue Canadian defence bonds to help raise capital for companies.

National Bank of Canada NA-T tapped former top general Rick Hillier to advise on defence and assist with the lender’s efforts to grow its client base in the defence and security industry, as well as among dual-use companies.

CIBC’s commercial banking unit has established a national network of defence sector specialists to provide insight on the sector, structured financing and business connections across the industry.

The bank is also expanding its military banking program, which includes members of the Canadian Armed Forces, veterans, members of the Coast Guard and their families.