Europe’s Defense Reset Hits Banking Blockage

Welcome to the Brussels Edition, Bloomberg’s daily briefing on what matters most in the heart of the European Union.

As EU leaders prepare to potentially mobilize trillions of euros in additional defense funds, they are finding self-inflicted resistance in the form of banking regulation. The industry has been accustomed to treating arms manufacturers as a reputational liability, thanks to rules designed to weed out high-risk clients or to discourage lending to sectors that clash with ESG metrics. Now defense industry executives, politicians and senior bankers are calling for an urgent revamp of regulations and internal processes to make it easier for banks to quickly channel funds to arms manufacturers and military contractors.