By Dave Pearson
PARIS--PSA Peugeot Citroen (UG.FR) Tuesday said it is confident
that the European Commission will approve the French government's
loan-guarantee package for the French auto maker's in-house bank.
The state support is crucial for allowing Peugeot, whose own
creditworthiness is rated junk by ratings agencies, to compete with
financially stronger rivals in offering attractive financial terms
to customers.
"I don't envisage a problem," with the probe by the commission's
anti-trust authority into whether the state aid is unfair,
Peugeot's chief financial officer Jean-Baptiste de Chatillon told a
group of journalists.
He said a decision is likely during the course of the summer.
"In any case, I'm not worried," he said, noting that the commission
has sought comments from Peugeot's competitors.
The commission has provisionally approved the loan package that
will allow the car maker's in-house financing arm PSA Banque to
benefit from a state guarantee on up to EUR7 billion ($9.14
billion) of refinancing operations. Peugeot is among the auto
makers hardest hit by the collapse of demand for new cars in Europe
on which the French company remains largely reliant. Peugeot's
European sales fell 13% in the first six months of this year,
compared with the corresponding period in 2012.
The EU probe, announced in May, adds uncertainty to a
loan-guarantee package agreed by France in October and
provisionally approved by the European Commission, the EU's
executive arm, four months later, which would enable the ailing
French auto maker's in-house bank to borrow funds at competitive
rates. The bank is reliant largely on the wholesale market for its
funding, though it has since made a big push to gather more
customer deposits.
If the commission were to find that Peugeot has benefited from
the state aid to a degree that's not warranted and that distorts
competition among Europe's auto makers, it could demand
compensatory measures beyond those already imposed by the French
government. These include the nomination of an unofficial state
representative and the appointment of two employee representatives
to Peugeot's board.
Separately, Mr. Chatillon said that PSA Banque's new "Distingo"
savings accounts have already reaped more than EUR780 million
($1.02 billion) in deposits since they were launched in March,
nearly double the initial annual target of EUR400 million, largely
due to a promotional interest rate of 5.5%.
PSA Banque Chief Executive Philippe Alexandre said the bank may
launch term deposit accounts next year and plans to offer savings
accounts in countries outside France. He wouldn't say whether
Germany would be the first territory to be targeted.
RCI Banque, the in-house bank of local rival Renault, has
harvested EUR2.58 billion in deposits since it launched its savings
accounts 18 months ago, much of which stems from depositors in
Germany, where individuals are used to having accounts with car
makers and other industrial groups. Volkswagen AG, Europe's biggest
auto maker by volume, has some EUR23 billion of customer deposits
on the books of its Volkswagen Bank unit.
Write to David Pearson at david.pearson@dowjones.com
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