PSA said to near Santander deal to strengthen lending arm

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PARIS (Bloomberg) -- PSA/Peugeot-Citroen is close to a deal for a joint venture with Banco Santander to strengthen the financing of the automaker's lending arm, two people familiar with the matter said.

Santander would pay cash for a portfolio of loans from Banque PSA Finance, and the two would create a sales financing network together, said one of the people, who asked not to be identified because the talks are private.

The companies aim to announce the agreement next week, the people said. The banking deal would come on top of a 3 billion euro ($4.11 billion) stock-sale plan that PSA is negotiating with France and Dongfeng Motor Corp., a partner of the automaker in China. The French manufacturer said last week that its board aims to vote on the capital increase on Feb. 18.

PSA has burned through more than 4 billion euros in cash in the last two years as deliveries fell amid slumping demand in its home region. The new funding would help PSA pay for the development of new models and expand in growing markets such as China.

Representatives for PSA and Santander declined to comment on the possible deal.

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