Here it is (emphasis is mine), and we should consider the disadvantage that it would put our car makers in EVEN if they did NOT need a loan:
European carmakers eligible for rescue funds
By Richard Milne in London, Daniel Schäfer in Erlangen and Ben Hall in Paris
Published: October 20 2008 23:33 | Last updated: October 20 2008 23:33
German and French carmakers, which have asked the European Commission for €40bn ($53bn) in cheap loans, are eligible to tap their governments’ banking rescue plans, according to government officials.
Both the German and French finance ministries said on Monday that the financing arms of carmakers could use the state guarantees for new lending of up to €400bn and €320bn respectively.
“Car banks can definitely participate in the scheme,” said the German ministry. A French official said: “If you are a bank specialised in providing credit for the purchase of cars you need access to the wholesale markets like any other bank.”
The financing arms account for more than 15 per cent of operating profits at the European carmakers, according to analysts at Morgan Stanley, and car manufacturers have a large short-term refinancing need because of the credit they offer their customers.
The availability of government credit guarantees comes as the European car industry faces up to its toughest time in decades as demand is plummeting in countries including the US, the UK and Spain.
Also, carmakers have to invest billions of euros to meet stringent new emissions targets by regulators.
This month all carmakers in Europe called on the European Commission to give them €40bn in cheap loans in an attempted copy of the $25bn the US Congress has promised mostly to domestic manufacturers.
All of the carmakers contacted by the Financial Times – including Volkswagen, BMW, Renault and PSA Peugeot-Citroën – said they had no current need to use the government scheme. Several also said the €40bn request was separate and would need to be dealt with by national governments.
But governments have been split with the French president and Italian prime minister calling for help for the car industry while German ministers have publicly squabbled over the need for a separate bail-out.
Any help from governments would be subject to conditions in each country. But, presuming the carmakers only asked for the credit guarantees, they would be far less onerous than those demanded of banks that need new capital. Both countries would offer the guarantees at an unspecified commercial rate of interest.
In Germany, companies would be required to submit their business model for approval.
In France, companies would need to satisfy certain conditions on “ethics”, particularly in regard to pay. The government wants all companies to link severance payments for top managers to performance and restrict the issuing of share options. Companies would also have to increase their stock of credit to consumers and businesses by an annual rate of 3-4 per cent, the government announced on Monday.
Copyright The Financial Times Limited 2008
