BNP Paribas has reaffirmed its commitment to financing the defence sector, with a particular focus on NATO countries, as geopolitical tensions drive increased European military investment.

The French banking group, a key European player in asset finance and leasing, deployed €24 billion by the end of 2024 to support corporate groups and small and medium-sized enterprises (SMEs), of which €12 billion was allocated directly to the defence sector.

The bank’s financing covers a range of services, including credit, guarantees, bond issuances, export finance, asset management, and direct equity investments. BNP Paribas’ defence sector clients are primarily industrial firms within NATO countries, with 70% based in Europe — including 40% in France — and 25% in North America.

BNP Paribas has played a significant role in securing funding for defence companies as a player in capital markets. Over the past three years, it has participated in bond issuances worth €55 billion, with €33 billion issued in 2024 alone. Additionally, the bank contributed €2.2 billion to primary equity issuances for defence firms between 2023 and 2024.

BNP Paribas also manages €2.5 billion in defence sector assets, including:

• €200 million in equity investments in 46 French SMEs via BNP Paribas Développement
• €1.7 billion in third-party investments through BNP Paribas Asset Management funds
• €500 million through BNP Paribas Cardif

The bank’s expanded support comes amid mounting political pressure to increase defence financing across Europe. In the UK, a group of more than 100 Labour MPs and peers has called for banks, investors, and pension funds to classify weapons manufacturers as “ethical” investments to ensure greater financial backing for the industry.

In an open letter signed by 96 MPs and six peers, the group urged financial institutions to “sweep away ill-considered anti-defence rules which are acting as a barrier to doing what is right.” The intervention highlights growing opposition to environmental, social, and governance (ESG) policies that restrict investment in arms manufacturers.

The UK initiative aligns with wider European concerns following the US decision to freeze military aid to Ukraine, which has placed additional pressure on European nations to increase defence spending. French Finance Minister Eric Lombard has signalled new budgetary measures to bolster France’s military capabilities, warning that Europe must “go faster and harder” to strengthen its self-sufficiency in defence production.

With European governments reassessing their long-term defence policies, financial institutions face increasing scrutiny over their approach to the sector. France, like other European nations, significantly reduced its military spending after the Cold War. While the country surpassed NATO’s 2% GDP target for defence expenditure last year, it remains below historical levels.

The shifting political and security landscape suggests that banks and asset managers will play an expanding role in financing defence firms. BNP Paribas’ latest commitments position it as a key financial partner in supporting the industry’s growth and modernisation as European policymakers push for greater investment in military capabilities.