In an interview with the daily newspaper Libération, the French Minister of Industrial Renewal, Arnaud Montebourg, has indicated the government wishes to see PSA Peugeot Citroen appoint government and worker representatives to its board, reduce planned job cuts and guarantee the future of domestic plants in return for any financial bailout of the OEM’s Banque PSA Finance (BPF).
PSA recently confirmed that a support plan for BPF is currently under consideration and that it is reviewing options to enable the banking unit to maintain sufficient financing volumes amid concerns that debt rating cuts could push it into junk status.
Wholly-owned by Peugeot SA, Banque PSA Finance provides financing for sales of Peugeot and Citroen cars and light commercial vehicles in 23 countries. It offers retail and fleet customers a range of financing solutions and related services, and provides Peugeot and Citroen dealers with financing for new and used vehicles and spare parts inventories. In the first half of 2012, the bank saw its penetration rate among the PSA group’s customers rise by 1.7 points to a historic high of 28.1%.
A previous Le Figaro report suggested that the French Ministry of Finance and banks, including BNP Paribas, Credit Agricole, Natixis, Societe Generale and foreign banks which represent 50% of the loans outstanding, were preparing a rescue plan for BPF. The plan was said to involve a commitment by banks to postpone the payment date of €4bn (US$5.2bn) of debt and bring new credit lines of €1.5bn to BPF, while the state would provide a guarantee for around €4bn.
Montebourg had already warned that any help for BPF involving French state assistance would come with strings attached, and in the Libération interview, as reported by Reuters, he confirmed: “I want workers to sit on the supervisory board, to bring more balance to strategic decisions. I also want an independent administrator on the board to liaise with the government.”
The French state has no equity stake in PSA, unlike at Renault, where the government has two board seats and a 15% holding.
Recent ratings agency downgrades to PSA’s credit rating have threatened to relegate BPF to junk status, further widening the competitiveness gap with rivals such as Volkswagen by making its car loans more expensive.
Montebourg also vowed to “weigh the consequences” of PSA’s alliance with General Motors in the Libération interview, adding that the French government is seeking “a commitment from Peugeot to preserve all of its French plants, so the kind of restructuring plan announced in July does not repeat itself.”
