MILAN -- Italy's biggest retail bank, Intesa Sanpaolo, gave its preliminary approval to a state-backed 6.3 billion euro ($6.9 billion) three-year loan for Fiat Chrysler's Italian unit, a source close to the matter said on Tuesday.
While Intesa's approval is a crucial step, the financing needs a sign-off from Italy's export credit agency SACE, through which the Italian government provides its guarantee on 80 percent of the amount.
The loan would be Europe's biggest government-backed financing to an automaker since the start of the coronavirus pandemic.
The loan is designed to bolster the domestic auto industry by directly channeling resources to FCA's suppliers.
Car sales in Italy plunged 98 percent in April and FCA's plants were mostly shuttered during the nationwide lockdown in March and April.
FCA burned through $5.5 billion in the first quarter, and the company and PSA Group earlier this month scrapped a plan to pay out 1.1 billion euros in dividends as part of their 2019 merger agreement.
The new financing plan would "provide further support to some 10,000 small and medium enterprises in the automotive supply chain in Italy," FCA said in its May 16 statement.
FCA's Italian unit last year lost about $1 billion before taxes.
Bloomberg contributed to this report