Canadian Banks Expand Financing as Defence Spending Ambitions Grow

BMO Financial Group is expanding its activity in Canada’s defence sector as the federal government advances broader defence-spending and investment ambitions. CEO Darryl White said the bank is “responding to the signal” from the Government of Canada and drawing on its established relationships with small and large domestic firms. “We’re taking a strength of ours (and) leaning into it even more heavily than we were before,” White said. For government contractors, the development is a market-financing signal: a major lender is positioning to support a sector where procurement, industrial capacity, and related infrastructure could require substantial private capital alongside public spending.

The bank’s commitments should be read in context. In September, BMO announced plans to mobilize up to $70 billion in new capital over 10 years for multiple priority areas of Canada’s economy, including defence. The commitment also covers electricity, energy and transportation infrastructure, oil and gas, mining, and artificial intelligence; it is not a defence-only allocation. BMO is scheduled to co-host a defence forum in Toronto on October 22, 2026, with the Institute of International Finance. The event is intended to bring finance leaders from Canada’s defence industry together to discuss opportunities and challenges, making it a potential venue for suppliers to communicate capital requirements and understand lender priorities.

Other large Canadian banks have announced related commitments with different scopes. CIBC has committed $2 billion to support small and medium-sized defence businesses with dual uses in civilian markets. TD Bank has committed $150 billion over five years to accelerate investment across key industries, including defence. These figures are not interchangeable: CIBC’s stated focus is smaller defence businesses, while TD’s commitment spans several industries, and BMO’s capital-mobilization plan also covers a broad group of priority sectors. None of the commitments is a government procurement budget, a contract award, or a guarantee that a particular supplier will receive financing or future work.

The financing activity coincides with policy and institutional developments that may shape the market. BMO joined the international Defence, Security and Resilience Bank (DSRB) in February. Spearheaded by NATO countries, the DSRB is intended to reduce borrowing costs for military spending by pooling credit strength; the source reports that all of Canada’s Big Six banks support the initiative. BMO economists have forecast that Canada’s pledge to spend five per cent of annual GDP on defence by 2035 could generate about $150 billion in annual economic impact by that year. White said he believes the target is achievable and expects the bank to play a significant role across procurement and infrastructure. Those projections are an economic forecast, not a published contract pipeline. For contractors, the practical opportunity is to assess financing needs and make a clear case for capacity investment while tracking actual solicitations and awards separately.

• BMO Financial Group is expanding its defence-sector financing activity in response to federal spending signals and its existing sector relationships.
• BMO’s plan is to mobilize up to $70 billion over 10 years for multiple priority sectors, including defence—not defence alone.
• BMO will co-host a defence forum with the Institute of International Finance in Toronto on October 22, 2026; suppliers can use the forum to discuss capital needs and industry challenges.
• CIBC has committed $2 billion for small and medium-sized defence businesses with civilian dual-use applications.
• TD Bank has committed $150 billion over five years across key industries, including defence; the commitment is broader than defence procurement.
• BMO joined the Defence, Security and Resilience Bank in February. The NATO-country-led initiative aims to lower borrowing costs for military spending by pooling credit strength.
• BMO economists estimate that Canada’s pledge to spend five per cent of annual GDP on defence by 2035 could produce about $150 billion in annual economic impact by that year; this is a forecast, not a contract forecast.
• Suppliers should distinguish private financing commitments from government contract demand, pursue lender discussions where useful, and continue monitoring formal procurement opportunities and awards.