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Deutsche Bank’s CEO is doubling down on defense investment

June 24, 2025
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Deutsche Bank’s CEO is doubling down on defense investment

Deutsche Bank is doubling down on defense investment as a broader European drive to rearm unlocks fresh capital in the region.

Speaking to CNBC’s Annette Weisbach at the Tag der Industrie conference in Berlin on Monday, Deutsche Bank CEO Christian Sewing said that the German lender has increased its exposure to the defense industry to the tune of “double-digit billion” euros.

“We have actually sized up not only our portfolio appetite, but also the resources we bring in in order to advise our clients,” he said.

Speaking more broadly about the industry, Sewing noted that “we have clearly, in particular on the European side, been under investing,” stressing that “defense is one of the core topics for a country, [and] I think we are always underestimating what the positive impact of defense spending is.”

His comments come on the week of a key NATO summit in which members are looking to potentially agree increase their defense contribution spending target to 5%. NATO members have reportedly agreed to this hike in principle ahead of an annual summit this week, with Spain emerging as an outlier.

U.S. President Donald Trump started floating the idea back in January, as he called on fellow members of the alliance take more responsibility for their own security.

Since then, the EU has pledged to mobilize 800 billion euros ($928 billion) to help member countries “massively boost its defense spending,” while the U.K. has also vowed to up its own expenditure, and Germany’s parliament passed a historic reform that paved the way for greater investment in national security.

Financing the drive

Sewing said that Deutsche Bank must now work with with public institutions to see how to leverage governmental funds.

“At the end of the day, the money needs to go to the mid cap and the supplier companies,” he said. “And here we need to work smartly with institutions like [development bank] KfW or [the European Investment Bank].”

Sewing said that if the EU “finally work[s] on” the capital markets union — its plan to create a single market for capital to allow investments and savings to flow freely across the bloc — Deutsche Bank and its partners will be “well prepared to finance” defense expenditure.

The German lender’s chief agreed that the mood in Europe had catalyzed momentum among defense startups in the region, noting that the EU’s determination to hike defense spending could act as a stimulus for innovation.

He argued that the ingenuity underpinning California’s Silicon Valley is partly the result of the United States’ long-standing willingness to invest in defense.

Spain opts out of NATO's new 5% defense spending target

European defense stocks have been on a bull run for most of the year amid the broader spending drive, with many market watchers seeing further upside ahead.

The Stoxx Europe Aerospace and Defense index is up by almost 50% year-to-date, with some companies in the sector almost doubling in value.

As of the Monday settlement, German tank parts manufacturer Renk has seen its shares surge 259% since the beginning of the year. During that time, German defense giant Rheinmetall‘s stock jumped 183%, while Germany’s Hensoldt popped 168%.

In a Tuesday note, Deutsche Bank strategists raised their target price on Airbus, giving the stock a “buy” rating and touting the 5% NATO target as a move that would soon be “benefiting defence companies.”

“The US is shifting its focus to the Indo-Pacific region, creating a capability gap in Europe for transport, tanker aircraft and helicopters, which Airbus Defence and Space (ADS) is well-positioned to fill,” they said. “ADS’s growth and profitability are expected to materialise post-2028, precisely when Airbus Commercial may reach a plateau. Further, Airbus remains affordable compared to both commercial and defence peers.”

In a June 10 note, meanwhile, the lender’s analysts said Europe has “a rare opportunity to capitalise on the evolving global landscape.”

“With inflation pressures easing and a fresh wave of defence and industrial stimulus gaining traction, economic momentum is gradually returning,” they said.

At the European Defence and Security Summit in Brussels earlier this month, the EIB announced it would loan Deutsche Bank 500 million euros to facilitate the provision of financing for small and medium-sized businesses working in the EU’s security and defense supply chain. The funding will also be accessible for military and police infrastructure, such as training facilities.

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