Retired general Rick Hillier speaks at Queen’s Park in Toronto on Friday, Dec. 11, 2020.Tijana Martin/The Canadian Press
National Bank of Canada has tapped a former top general who led the country’s combat mission in Afghanistan as a strategic defence advisor, the latest move as Canada’s largest lenders look to expand into financing the long-neglected sector.
Retired General Rick Hillier will assist with National Bank’s efforts to grow its client base in the defence and security industry, as well as dual-use companies.
Canada’s banks have been looking to boost financing and services for the defence sector, but face roadblocks as companies navigate hurdles with compliance procedures and securing contracts.
Mr. Hillier will advise on trends in the defence sector and provide insights on issues affecting Canada’s resilience, security, advanced manufacturing, aerospace and the defence industrial base, the bank said in a release Tuesday.
He served for more than 35 years in the Canadian Armed Forces and was appointed as chief of the defence staff from 2005 to 2008. During his time in the military, Mr. Hillier led major domestic and international operations, including NATO missions.
In 2008, Toronto-Dominion Bank hired Mr. Hillier on a part-time to give talks to employees and customers about his experience abroad with the military.
Since retiring from military service, he has advised on public initiatives, including Ontario’s COVID-19 Vaccine Distribution Task Force in 2020. He recently served on the board of the Defence, Security and Resilience Bank.
“His perspective will be invaluable as we continue to support our clients and navigate a rapidly evolving environment,” National Bank CEO Laurent Ferreira said in a statement.
As defence companies sort through barriers to securing financing from banks, the challenges threaten to slow Prime Minister Mark Carney’s plans to rapidly expand Canada’s defence capabilities. Ottawa has pegged more than $84-billion in defence spending over five years in a bid to reduce Canada’s dependence on the United States for protection.
Last year, National Bank identified companies doing work related to defence, in particular among smaller defence companies with significant growth potential, according to a source familiar with the matter. The bank reassessed how it reviews those types of businesses and how it can or cannot finance Canadian business related to defence in an effort to boost its support for the sector.
The Globe is not identifying the source as they are not authorized to speak about the matter publicly.
The banking sector has typically shied away from defence financing, which is a complicated process. Canada’s largest lenders must comply with strict regulatory requirements on the amount of risk they are exposed to in their client portfolios.
The defence sector has faced reputational concerns in recent decades, with banks deterred by the criticism that comes with investing in or financing businesses linked to military weapons and equipment. That stigma is easing as geopolitical tensions rise and governments boost their defence budgets.
Banks also often require that defence companies secure procurement contracts before they are willing to lend – especially to smaller businesses with uncertain revenue streams and nascent compliance programs.
European banks were among the first movers to ramp up their defence practices. Last year, Germany’s Deutsche Bank AG created a team focused on deals in defence and infrastructure. Meanwhile, U.S. banks have long been entrenched in the country’s expansive defence sector.
In May, Canada’s Defence Minister David McGuinty appealed to a room of financial institutions, entrepreneurs and investors that defence companies are ready to scale advanced manufacturing and compete globally, but they cannot achieve those ambitions without capital.
He said the federal government is working to remove “blockages” to financing defence companies, including export approvals and security clearances.
“But I’ll be really blunt,” Mr. McGuinty said. “We don’t have any choice. We need to move forward now. We need to look out for ourselves. We need to step it up domestically.”