EU OKs French aid for Peugeot

The European Union has approved the French government’s 7 billion euro ($9.28 billion) loan guarantee to PSA Peugeot Citroën’s in-house banking unit, Banque PSA Finance,

the

Wall Street Journal

reported.

After rating firms downgraded Peugeot’s creditworthiness last year, the banking unit was unable to raise money at competitive rates, the

Journal

article noted.

The EU’s approval came with conditions, including the requirement that Peugeot institute a “major” disposal of assets to fund its restructuring, the report noted.

Peugeot has been exploring the possibility of expanding its partnership with General Motors as well as its relationship with a Chinese partner, Dongfeng Motor Corp., the

Journal

reported.

“The EU’s conditions on France’s loan guarantee could be an incentive to do other deals,” such as selling part of Banque PSA to Spain’s Banco Santander SA, the article said. (Source:

Wall Street Journal,

July 31, 2013.)