LONDON -- Volkswagen AG and PSA/Peugeot-Citroen are lining up to tap the cheap European Central Bank loans that are keeping the finance industry afloat.
Financing units of Europe's biggest automakers may be able to borrow from the ECB's longer term refinancing operation (LTRO) because they have banking licenses.
A total of 523 lenders borrowed 489 billion euros ($636 billion) of 1 percent three- year loans under the central bank program in December.
Stefan Rolf, the head of securitization at Volkswagen Bank GmbH, said in an interview Thursday that the Wolfsburg-based automaker is considering accessing the LTRO.
Peugeot's Banque PSA Finance unit is in talks with the ECB about borrowing money and is offering more than 1 billion euros of collateral, Chief Financial Officer Jean-Baptiste de Chatillon said Wednesday.
"The auto industry is a significant provider of credit to the economy and the ECB is keen to get credit flowing where it needs to flow," said Huw Van Steenis, a bank analyst at Morgan Stanley in London. "If giving loans to carmakers helps that process, then the central bank may feel it's a good use of the money."