- Ontario is urging Ottawa to back Toronto as the headquarters for the proposed Defence, Security and Resilience Bank (DSRB), pitching jobs and growth for Canada’s defence-industrial base.
- The DSRB is envisioned as a AAA-rated multilateral lender blending public and private capital to finance defence, security and resilience projects for democratic and NATO-aligned countries, but it still lacks confirmed government shareholders.
- Toronto’s case rests on its deep capital markets, major-bank presence, dense Southern Ontario defence-tech ecosystem, and global connectivity and diplomatic footprint.
- Major uncertainties include competition from Europe’s ERB/SAFE efforts and unresolved governance, funding, and lending terms that will determine whether the bank launches and where it is based.
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The Ontario government, alongside the City of Toronto and federal MPs, on December 17, 2025, proposed that Toronto become the headquarters for the new Defence, Security and Resilience Bank (“DSRB”), a multilateral financial institution aimed at strengthening the financing of defence, security, and resilience among democratic and allied nations. The institution would blend private and public capital to offer long-term credit, liquidity, and support for industry suppliers of various sizes while simplifying multinational procurement processes.
The DSRB is also a private sector-driven initiative. Major international banks—including JPMorgan, Deutsche Bank, Commerzbank, ING, LBBW, and RBC Capital Markets—have committed technical and financial support. Its target is to raise £100 billion (approximately USD $130-140 billion) under a triple-A credit rating to mobilize large-scale capital for defence projects globally, particularly addressing gaps in financing for smaller or less creditworthy states. However, no national governments have yet formally pledged financing or membership, leaving the DSRB in a formative phase where legal, regulatory, and strategic terms remain under negotiation.
Toronto’s bid highlights strategic advantages: it is Canada’s financial hub with deep capital markets, robust banking sector, advanced defence-capable ecosystems in AI, cybersecurity, aerospace, quantum, and dual-use technologies; plus global travel and diplomatic infrastructure that facilitate international operations. Key data points include: Southern Ontario has over 900 defence-capable organizations; Ontario represents approximately 36% of Canadian defence employment; financial services in Toronto have grown to be among the fastest globally in the last decade; and Pearson Airport connects to nearly 200 destinations offering diplomatic reach.
Strategic risks and open questions remain. First, Toronto must compete against European efforts like ERB, which propose narrower membership (European NATO members), focus on lending at market rates, and enjoy some governmental endorsements (e.g., Poland); ERB seeks roughly €250 billion in disbursements leveraging ~€10 billion in shareholder capital. Germany has publicly rejected the formation of new armaments financing tools beyond existing platforms like SAFE (Security Action for Europe), signaling possible obstacles at the state level for both DSRB and ERB. Second, financing terms: DSRB’s goal of AAA rating, size of capital base, cost of borrowing, and risk sharing will be essential in gaining government support—and high sovereign members may resist diluted control or exposure. Third, sovereignty and regulatory alignment: cross-national governance, procurement standards, export controls, and industrial policy vary; alignment will be complex. Fourth, federal and provincial political dynamics: for Toronto to win, Ottawa must agree—and federal budget, defence, and trade priorities will shape decision-making.
For investors and stakeholders, the DSRB represents a potential new source of defence industrial financing—opportunities for Canadian SMEs, dual-use technology firms, and capital markets players. If headquartered in Toronto, spillover effects could include clustering, access to global capital, job creation (Ontario estimates ~3,500 direct skilled jobs plus secondary employment), and enhanced strategic importance. But investors should monitor government commitments, the DSRB charter, funding mechanisms, and international competition, particularly from Europe, for signs of whether this initiative can move from proposal to implementation.
Open questions include: Which countries will join as founding government shareholders (and on what terms)? Will DSRB be complementary to, or overlap/compete with, existing European tools like SAFE and ERB? What will be the mix of public vs private capital? What are the projected returns, pricing, risk allocation, and impact on defence inflation and procurement efficiency? Lastly, will Ottawa formally endorse Toronto’s bid—and over what timeline?
Supporting Notes
- Ontario proposes Toronto as headquarters for newly proposed DSRB; it would “create approximately 3,500 skilled jobs … and countless more secondary jobs” while strengthening Canada’s military financing capacity.
- Toronto’s proposal emphasizes capital markets depth, strong banks, advanced tech and defence innovation ecosystems, global connectivity via Pearson (direct flights to ~200 destinations), 107 consulates, over 190 languages spoken locally.
- The DSRB is backed by major banks including JPMorgan, Deutsche Bank, Commerzbank, ING, RBC Capital Markets, LBBW, aimed at £100 billion in capital under AAA rating.
- No governments have officially committed to being founding shareholders in DSRB as of latest reporting; the UK has publicly declined, Germany opposes new armaments financing instruments beyond existing tools like SAFE.
- The ERB has proposed merging with DSRB, and is focused on European NATO members, lending at market rates; ERB plans roughly €250 billion in lending from €10 billion in member capital; DSRB seeks broader membership including non-European countries like Canada.
- Canada has committed to raising defence spending from under 1% of GDP historically toward 2% by 2025-26 and to 5% by 2035, increasing domestic procurement and industrial capacity; BDC’s new defence platform is injecting CA$4 billion to support SMEs in the defence sector.