In recent weeks and months, Defence Minister Jana Černochová has been making great efforts to improve the relationship between the banking sector and the defence industry and its financing. At the government level, she has become a key figure in drawing attention to the problem of insufficient resources for financing the development of the defence industry as a strategic sector for the Czech Republic and for NATO, and has also brought other actors into the debate: the Ministry of Finance of the Czech Republic and banks. This is important in a situation where some smaller defence industry companies may have problems with even a trivial opening of an account.

The Czechoslovak Group (CSG) welcomes the Defence Minister's activity and points out that bank financing remains a problem. David Chour, Vice-Chairman of CSG, says: "Although the relationship of banks to the defence industry has generally improved since the outbreak of Russian aggression against Ukraine, the situation is still not ideal. The unavailability of bank financing is an issue that limits investment in capacity building and the ability to finance major contracts. As the largest Czech company in the defence industry, we are keenly aware of this issue and we are glad that the Minister of Defence, Jana Černochová, is highly engaged in it."

CSG has been growing steadily since its inception, and this growth accelerated sharply after the outbreak of war in Ukraine, where CSG supplies heavy equipment and, in particular, much-needed large-calibre ammunition. CSG is investing heavily in increasing production, building new halls, installing new production lines and recruiting new staff. However, extensive investment activity within the group is hampered by the attitude of some banks. "There is still a situation where some banks do not finance the defence industry at all and some only within limited limits on a selective project-by-project basis, which is not sufficient at the present time when billions of dollars of investment in production growth needs to be financed. For example, the implementation of large projects for Ukraine would not be possible at all if the financing was not provided directly by NATO governments, which largely substitute the role of the private banking sector," David Chour points out, while praising state financial institutions.

Smaller companies may have problems even opening an account

One of the traditional Czech arms manufacturers recently told the media that it has no problem with access to banks and financing in general, even though it is a publicly traded company. "Going public is not a realistic solution for most of the Czech defence industry, which consists mainly of small and medium-sized companies. We know from the market that some smaller companies, our important suppliers of components, may have a problem with even a trivial opening of an account. It is also necessary to distinguish between companies that supply most of their production, for example, weapons for hunters and sport shooters, to the civilian market, and only a small part of their sales are made up of contracts for armies or police forces. From the banks' point of view, this is largely a different segment, not the defence industry."

CSG therefore supports the efforts of Defence Minister Jana Černochová to improve the access of defence industry companies to bank financing. It is ready to engage in a discussion on this topic and offer practical experience of military equipment or large-calibre ammunition manufacturers from the capital markets and their functioning. "The issue of banks' access to the defence industry must not be downplayed and the public debate that politicians like Jana Černochová are conducting must not be minimised. It is extremely important for the defence capability not only of the Czech Republic, but also of the EU and NATO," concludes David Chour.