By on January 9, 2013

The French government is asking the EU Commission to approve its bail-out of GM’s alliance partner PSA Peugeot Citroen, Reuters says with input from French daily Les Echos.

The rescue operation initially was called help for PSA’s bank, which would not require state aid approval from Brussels. Brussels did not buy the reasoning, called the 7-billion-euro ($9.2 billion) state loan guarantee restructuring aid and told the French government to ask for permission.

The process is expected to take about two months. What usually happens at the end of the process is that aid will be un-tied from obligations to keep jobs and suppliers in the country.  Reuters also thinks that “a state aid probe by Brussels could ultimately increase the cost to Peugeot of the state loan guarantee and the 11.5 billion-euro refinancing deal to be finalized with creditors next month.”

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