Renault, Ford, criticize government bailout of PSA-owned bankby Ronan Glon
The French government will guarantee roughly $9 billion in new bonds issued by the bank.
Last week, the French government announced a controversial plan to back €7 billion (roughly $9 billion) in new bonds issued by Banque PSA Finance, the troubled automaker's financial division. The urgent move will allow PSA Peugeot-Citroën to keep lending money to customers at competitive rates.
In exchange for helping the bank, the government will place an independent administrator on PSA's board of directors. The administrator's identity is not known but he or she will be tasked with helping oversee that PSA does not run itself any deeper in debt and waste taxpayer euros.
The bailout was heavily criticized by Renault, Ford and the German state of Lower Saxony, Volkswagen's second-largest shareholder.
"I don't think it's sustainable for support from governments to keep competitive companies going forward, particularly in a protracted downsized economy," said Stephen Odell, the head of Ford's European arm, in an interview with Reuters.
PSA rival Renault, which is 15 percent owned by the French government, issued a similar statement.
"We're paying very close attention to the effects that the bailout will have on PSA's operations. Once we get a better idea of how the group will benefit from it, we will need to make sure that it does not give PSA an unfair advantage on the market. That is all I am able to say right now," explained a spokesperson for the French automaker.
The European Commission in Brussels, Belgium, is expected to rule on whether or not the government's bailout of Banque PSA Finance is legal before the end of the year.
Photo by Ronan Glon.