After approving a $1.6 billion loan guarantee for PSA’s captive finance arm, the European Commission demanded a restructuring plan for all of PSA within six months.
Reuters quotes an EU spokesman as telling the French government
“We expect France to notify to us of a restructuring plan, not just for the banking arm but for the whole PSA group, because this aid also benefits the whole group,”
Government aid for Banque PSA was first proposed back in October, as it became difficult for the finance unit to borrow money due to the overall weakness of PSA itself. A bailout of Banque PSA was also seen as more palatable than providing aid to the car making unit.
Details of any potential restructuring are unclear, but the EU wants to make sure that PSA’s business will remain viable without any further state aid. Either way, PSA will be under the gun even further, as attempts to cut jobs have already raised the ire of France’s powerful labor unions and the current left-wing government.
Lacking the same profit sources as its French rival Renault (like low cost cars and exposure to healthy markets), PSA has been in the toilet financially, bleeding as much as 200 million euros per month. Even the new 208, France’s best-selling car last month, hasn’t been enough to help stem the tide.