FRANCE: EC grants PSA bank temporary guarantee to "avoid contagion" effect
PSA Peugeot Citroen's banking division has received temporary authorisation from the European Commission (EC) for France to guarantee EUR1.2bn (US$1.6bn) to avoid any "contagion" to the country's banking system.
Approval of the short-term measure is subject however, to PSA presenting a restructuring plan to the Commission, which includes the viability of Banque PSA Finance.
"The Commission considered granting of this guarantee was necessary to allow Banque PSA access to the market and to avoid any contagion effect on the French banking system, which would affect the cost of bank financing," said an EC statement.
"Commission guidelines concerning State aid given to banks during the crisis, mean the Commission can authorise rescue help for a six-month period in order to preserve financial stability."
The EC adds this aid will benefit not only Banque PSA Finance, but also the PSA Group as a whole.
Based on PSA's restructuring plan, the EC will issue a final decision on the aid granted.