PSA Won’t Sell Bank Stake

PSA Peugeot Citroen insists it will maintain full ownership of its Banque PSA finance arm despite the urging of some bondholders to sell a stake in the bank, Bloomberg News reports.

CFO Jean-Baptists de Chatillon tells the news service that the bank is core to the carmaker's business because its auto loans buoy PSA car sales. He notes that the unit is profitable and contributes half its earnings to the parent company.

London-based Legal & General Investment Management Ltd., which owns PSA bonds, says the automaker's shaky credit rating just one rung above junk-bond territory jeopardizes the bank's ability to borrow funds at a relatively low cost.

Divesting a portion of the finance arm could protect its investment-grade rating, LGIM asserts. Chatillon tells Bloomberg that selling a stake in the bank wouldn't improve its credit rating.

Some analysts support such a sale because it also would give cash-starved PSA an injection of fresh capital. They estimate a 50% stake in Banque PSA could fetch as much as €2 billion.