Westpac Expands Defence Lending Amid Security Focus

Westpac is increasing its lending to the defence industry through its new office in Germany, aiming to support military projects as defence spending rises in Australia and Europe. With higher military budgets following Donald Trump’s US election win, the bank is positioning itself to fund critical infrastructure related to national security.

The bank, which manages an institutional loan book of nearly $100 billion, is targeting expansion to $125 billion by 2026. Key areas of focus include European defence companies involved in Australia’s AUKUS submarine infrastructure. Westpac’s Frankfurt office, launched after securing a German banking licence in 2022, is central to this strategy.

Other banks are also increasing involvement in national security financing. Commonwealth Bank lends around $175 billion to the public sector, including defence, while ANZ supports the aerospace and defence sectors in Australia. Additionally, banks are expanding in the South Pacific, responding to government concerns about China’s growing influence.

Australia’s federal government has pledged an additional $50.3 billion for defence over the next decade, increasing military spending to 2.33% of GDP. Meanwhile, Trump’s presidency has influenced global defence investment, encouraging further financial backing for military infrastructure, including submarine bases and related projects.

Westpac remains open to funding energy projects, including nuclear power if future policies allow, and continues supporting Australia's energy transition while maintaining commitments to emissions reduction goals. As defence and national security become priority sectors, financial institutions are adapting to meet growing investment demands.

Source: Australian Financial Review, WSWS, WestpacIQ