The proposed Defence, Security and Resilience Bank could add a new financing channel for defence production, military mobility and critical infrastructure. A new analysis argues that the real question is not political symbolism, but whether the model can lower financing costs and improve market access for Hungarian companies.
A new multilateral financial institution designed specifically to finance defence, security and resilience investment is moving closer to reality – and the debate over its potential role in Central and Eastern Europe is now reaching Budapest.
The proposed Defence, Security and Resilience Bank (DSRB) is still in its establishment phase, but the initiative has already attracted public support from nine governments. Canada is the prospective host country, Luxembourg is developing a role as its European financial hub, and the political objective is for the institution to begin operations in 2027.
Ahead of the next stage of that debate, a new analysis by Halftermayer & Partners, authored by Dr Ferenc Antal, examines what the emerging institution could mean for Europe and, more specifically, whether Hungary could use it to finance investments it will increasingly need to make anyway at a lower all-in cost and with greater domestic industrial value creation.
Budapest to host international defence finance forum on 21 October
The discussion will also move from research to the conference table later this month. On 21 October, Budapest will host the International Defence Finance Conference – Financing Defence, Security and Resilience in Hungary and Central & Eastern Europe, an invitation-only executive forum organised by the Canadian Chamber of Commerce in Hungary.
The event is expected to bring together senior Hungarian and Canadian government representatives, representatives of the proposed DSRB initiative and the Central Bank of Hungary, commercial banks, multilateral finance institutions, legal and advisory experts, and industry leaders.
One of the central purposes of the conference is to move the debate around the DSRB from institutional concept to practical financial questions: how lending and guarantee instruments could work in practice, what banks would need in order to use them, how defence and resilience projects can become bankable, and where Hungary and the wider Central and Eastern European region could fit into the emerging system.
The programme is intended to combine an international defence-finance discussion with a Hungary and Central and Eastern Europe-focused session, followed by a smaller closed-door executive consultation. The event is not an official DSRB conference: it is a broader defence-finance forum in which the proposed bank will be one of the central subjects of structured knowledge-sharing and market consultation.
The event is also supported by leading international organisations, including global professional services firm PwC and ING Bank, the latter of which is actively involved in the Defence, Security and Resilience Bank (DSRB) initiative at an international level.
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So what exactly is the DSRB?
Despite its defence focus, the proposed institution would not be a NATO bank or an EU fund. Its model is closer to a specialised multilateral development bank: member states would provide capital, the DSRB would raise money on capital markets in its own name, and that funding could then be deployed through long-term loans, guarantees, co-financing and other risk-sharing instruments.
Public DSRB material currently envisages a capital structure consisting of 20% paid-in capital and 80% callable capital, with financing capacity potentially reaching five to eight times the institution’s capital base. The bank would seek a high credit rating – ideally AAA – although the Halftermayer & Partners study stresses that such a rating remains an objective rather than an established fact.
Public reporting has referred to an ambition to mobilise up to approximately USD 135 billion for defence and resilience projects. The study cautions that this should not be confused with money already committed or lending capacity that currently exists. The actual scale will depend on capital subscriptions, leverage, market access and the eventual credit rating of the institution.
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