The Defence, Security and Resilience Bank: the Battle of the Laurentians over the next new North Atlantic bank you’ve never heard of.
After Montreal and Ottawa, Toronto is the latest to declare its intent to host the Defence, Security, and Resilience Bank (DSRB)
After Montreal and Ottawa, Toronto is the latest to declare its intent to host the Defence, Security, and Resilience Bank (DSRB) with Premier Doug Ford’s announcement yesterday.
Toronto: pitching itself as the Bay Street financial hub;
Ottawa-Gatineau: the defence tech Silicon Nalley North with the heart of Canada’s defence ecosystem;
Montréal: an international, aerospace hub and R&D heavyweight.
For the Europeans:
The Ottawa-Montreal-Toronto corridor is a powerful, interconnected network in Central Canada’s St. Lawrence watershed, shaping national politics and policy and associated with the concept of the Laurentian Consensus - a historical tendency towards central Canadian perspectives in federal governance.
Why another bank?
In oversimplified terms: the Government of Canada (and it’s Department of National Defence), like those of many Western nations, pay upon delivery (or built in milestones). Cash flow is particularly challenging in the defence sector.
Take Chantier Davie, Quebec’s stalwart shipbuilder that has an order book that would break ice. With thousands of workers and suppliers, maintaining cash flow in between payment periods requires well-planned balance.
Ontario’s General Dynamics Land Systems Canada (GDLSC) was awarded the Logistics Vehicle Modernization Program. Spending began at contract award, leading to a cash crunch.
Or New Brunswick and Ottawa’s Marshall Land Systems, with years of losses but a giant orderbook and recently acquired from the UK by a Canadian indigenous firm.
The lumpy, long-term, highly regulated and political nature of defence acquisition is what makes the market unattractive to those less familiar with the market conditions.
On the one hand this ensures payment upon satisfactory delivery (sometimes an issue), on the other hand this increases costs for all involved.
Check out This Means War’s episode Show me the money! for a more international perspective on the importance of finance.
Life beyond the Laurentian corridor?
Several other initial gut contradictory reactions come to mind:
- Toronto does not need another Bank (or maybe a bank outside of Toronto is crazy);
- Halifax got the NATO Diana Accelerator, Montréal got the NATO Climate Change and Security Centre of Excellence (maybe another region this time?);
- Ottawa does not need another paragovernmental organization (or maybe a government focused bank would fit right in - and at least help return direct flights to the airport there).
My gut would have me lean towards Calgary or Vancouver (who the National Post reports as in the running (alongside another longshot - Halifax)) but the logistical challenges of time & space make it less feasible.
Pacific folk: it is helpful for a transatlantic bank to be on the Atlantic side of the continent.
What is the DSRB really?
DSRB is intended to provide long-term financing to defence industry suppliers and streamline multinational procurement for its expected 40 member nations, many of which are European. The headquarters is projected to create approximately 3,500 jobs (so says the National Post).
Led by Canadian Kevin Reed and with Former Chief of the Defence Staff Rick Hillier on the board.
May the best region win.
The run for DSRB headquarters highlights the vibrant new enthusiasm in Canada for the defence sector.
May the best region to lead Canada’s defence ecosystem abroad win.
Having escaped the Laurentian Consensus (despite being a product of it) to the Pacific side of Canada, I would argue that the knock against Vancouver is exactly that: being in the Pacific Time Zone. Since the bank will be dealing mostly with European countries, the time difference the flight time from London, Frankfurt or Paris, and the general Pacific Rim outlook would not seem to make Vancouver a good fit. I think Calgary is out for obvious (to me) reasons. I seem to think that Kevin Reed had the Ottawa region in mind but can't remember where I picked up that idea. The inter-city competition seems counterproductive for Canada's chance to get the headquarters.