Three questions for François Lefebvre
Deputy CEO, French Banking Federation (FBF
When did French investors become active in the defence industry? Why?
For French banks, investing in defence is far from new. In 2021, the French Ministries for the Armed Forces and the Economy conducted an analysis of all DTIB companies’ financial results. It showed that these companies carried more debt than companies in other comparable industries.
The Russian invasion of Ukraine in 2022 accentuated the trend. Between 2021 and 2025, financing increased by 75%, reaching €46.6 billion in loans and off-balance-sheet financing on 31 December 2025.
For banks and insurers, financing a defence company requires more work. If you look at exports, for example, you have export controls, politically exposed buyers, and other issues to deal with. This hasn’t stopped French banks from financing these companies, and they want to continue to do so.
How do French investors support these companies?
For banks in France, loans are the most common forms of financing. Total financing (loans and off-balance-sheet financing) increased by 75% compared to end-2021 and by 25% compared to end-2024. This includes investment loans, working capital facilities, and off-balance-sheet financing.
For exports, French banks lend to foreign customers so they can buy from French DTIB companies. At end-2025, outstanding buyer credit totalled €12.2 billion.
In terms of equity, French banks have put more than €500 million of their own money into French DTIB companies. Direct equity investment is not as common as loans, because euro for euro, equity financing costs a bank five times more than a loan.
French banks have also set up 30 defence and sovereignty equity funds specifically for SMEs, mid-caps, and unlisted start-ups in the industry. For example, Société Générale Assurances and CNP Assurances (a subsidiary of La Banque Postale) have entered a partnership with Tikehau Capital on the new Tikehau Defence and Security fund.
On 28 August 2025, BPCE became the first European financial institution to issue a European Defence Bond. BNP Paribas introduced its EU Sovereignty Bond, with a first issue in October 2025.
Also worth noting is that the six major French banks have signed agreements with the Ministry for the Armed Forces for their employee reservists, who receive up to 20 days per year on active duty, paid by the employer.
What is the medium-term outlook for French bank investment in DTIB companies?
According to figures from the French Ministries for the Armed Forces and the Economy, DTIB companies will need €7 billion in financing by 2030 – between €1 billion and €3 billion of that will be equity financing.
However, the transitional provisions of the European Capital Requirements Regulation (CRR) are due to expire in 2032. This means that the same loan today will require 54% more capital tomorrow. In practical terms, today, for a loan of €5 million to an unrated company, €390,000 of the bank’s capital is tied up. In 2032, it will be €600,000 – 54% more.
Ultimately, companies will pay more for loans. So, the French
Banking Federation has reached out to officials about this. These rules date back to the December 2017 Basel Accord. We feel it is time to change them to reflect the situation today, in 2026. The European Commission has taken note of our concerns. We are expecting the Commission to put forward proposed modifications in March 2027 to bring the regulations up to date, given the new geopolitical challenges we are facing.
- Aude Leroy
