Competition authorities in the European Commission say the French government has confirmed its guarantee to PSA Peugeot Citroen for its banking division, represents state aid and that the process will now be subject to a two-month evaluation.

At the end of last year, the French automaker secured agreement aimed at improving liquidity at Banque PSA Finance, the company's lending division, but the arrangement attracted the attention of the bureaucrats in Brussels, notably competition commissioner Joaquin Almunia.

PSA Peugeot Citroen is insisting the US$9bn guarantee made available by the French government for its banking division is a "help" and not a subsidy, but the EC says Paris has now conceded to Brussels the move does represent State aid.

However, the automaker is maintaining its stance the assistance will actually see the French State benefit from the move.

"It is not a subsidy," a PSA spokeswoman told just-auto from Paris. "It is a guarantee, a paying guarantee, it will bring the state money.

"It is a help or an aid, but it is not a subsidy. It is a kind of aid, yes, but not a subsidy in the sense they are giving us money."

For its part, the EC noted: "We confirm that the commission received notification from the French authorities on Monday, 7 January [in the] evening," a spokesman for Almunia told just-auto from Brussels.

"Once the notification is complete, the commission has two months to take a decision."

A separate spokeswoman in the EC confirmed to just-auto the notification was for state aid.