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Brussels approvs French aid to Peugeot temporarily

11 February 2013, 13:24 CET
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(BRUSSELS) - The European Commission authorised France on Monday temporarily to rescue car-maker PSA Peugeot Citroen to the tune of a six-month 1.2-billion-euro guarantee.

But the EU executive said in a statement that it wanted to see within six months a restructuring plan for the entire group.

Approval of "this guarantee was necessary to ensure access to the market of Banque PSA Finance (the banking arm) and avoid contagion of the French banking system that would affect banks' cost of financing," the statement said.

Global sales by France's biggest auto company and Europe's second-biggest, dropped 16 percent last year to below 3.0 million units, as the firm fell victim to slumping demand in Europe where the company makes about 60 percent of its turnover.

Its credit arm BPF offers finance to potential buyers but has been unable to refinance itself due to the group's difficulties.

The EU statement added that "given the aid benefits not only Banque PSA Finance but the PSA group in its entirety, France will have to present to the Commission a restrudturing plan for the PSA group.

"The Commission on this basis will be able to take a final decision on the aid."

The group last week announced a massive writedown of 4.7 billion euros ($6.3 billion) for 2012, raising speculation that it might need further state help, and is to announce annual earnings this week.

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PSA PEUGEOT CITROEN


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