Deutsche Bank: State guarantees for Rheinmetall and Co?

Deutsche Bank is calling for government guarantees for loans to defense companies. CEO Christian Sewing sees this as an important lever for accelerating the expansion of Europe's defense capabilities – and outlines concrete measures from which the bank itself is also likely to benefit.

Deutsche Bank advocates partially guaranteeing bank loans to defense companies with government guarantees. Public funds must be "efficiently combined with private capital to finance the expansion of capacities," writes CEO Christian Sewing in a guest article for Handelsblatt.

Banks and investors are ready to support the defense sector. Deutsche Bank's loan portfolio in the defense industry amounts to "a mid-double-digit billion amount." In order to "focus more closely on the needs of the industry," the bank recently established a special team for small and medium-sized enterprises in the defense sector.

"But the banks' financing capacity could be used far more effectively if it were combined, where appropriate, with guarantees or similar instruments from public institutions," Sewing continued.

He also pointed out that the European Investment Bank was able to mobilize investments totaling around €186 billion during the coronavirus pandemic through €24 billion in guarantees. "We should also use this mechanism for defense. Ideas such as a dedicated bank for defense, security, and resilience in the EU are therefore promising," the Deutsche Bank CEO explained.

Sewing's demand is unlikely to be entirely altruistic. As Germany's largest private bank, Deutsche Bank would be a potential lender for the loans to defense companies.