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British arms manufacturers are “dangerously reliant” on foreign banks, a former defence secretary has warned.
Lloyds, Barclays, HSBC and NatWest, the UK’s big four lenders, helped arrange just $13bn (£10bn) of $51bn in debt funding raised for the British defence sector over the past decade, data from Dealogic show.
By comparison, US and European banks raised $17bn and $11bn respectively, while Canadian and Asian banks accounted for $4.5bn and $4.7bn.
Former Conservative defence secretary Grant Shapps criticised Britain’s lenders for falling behind global peers in backing UK weapons makers.
He said: “UK banks are failing to back our own defence sector, leaving us dangerously reliant on foreign institutions.
“As defence secretary and since, I’ve raised this issue time and again. It is both unpatriotic and short-sighted for our financial institutions to shirk their role in safeguarding Britain’s security and sovereignty.
“I’m calling on the bank chiefs to step up and recognise that investing in our defence industry isn’t just good business – it’s a national imperative.”
The findings will alarm policymakers amid growing calls for the UK defence sector to become more self-sufficient after Donald Trump, the US president, vowed to stop subsidising Europe’s military.
Although Sir Keir Starmer has pledged to boost defence spending, a large cohort of Labour MPs have demanded that the financial sector does more to support Britain’s Armed Forces.
An open letter coordinated by Labour’s Alex Baker and Luke Charters last month, signed by more than 100 MPs and peers, demanded pension funds invest more of their clients’ money in the weapons industry.
However, banks also play a vital role in the defence industry by helping suppliers borrow money. They do this by arranging packages of loans to be sold to pension funds and sovereign wealth investors.
Between 2015 and 2025, four of the top 10 banks acting as “bookrunners” to help raise debt for UK defence companies were American, according to Dealogic. These were Citigroup, Bank of America, JP Morgan and Goldman Sachs.
BNP Paribas, a French bank, and Royal Bank of Canada also ranked higher than HSBC, Barclays and NatWest, according to the data.
By contrast, domestic lenders in the US and Europe played a greater role in supporting their country’s military infrastructure.
Three quarters of debt funding for the American military is undertaken by Wall Street, while European banks are responsible for half of the funds raised by EU defence suppliers, according to the figures.
The top three bookrunners for the US defence sector are all American: JP Morgan, Citigroup and Bank of America. Meanwhile, in Europe, the top three are Italy’s UniCredit and France’s BNP Paribas and Société Générale.