Peugeot’s finance unit may be saved by the French government image

PSA Peugeot Citroen may get unexpected help from the French government for its finance division, a move that is viewed by analysts as an indirect bailout of the automaker.

The state is examining the possibility of lending its support, with conditions and amounts remaining to be determined. I’ve already called the French major banks to meet on this subject,” said Finance Minister Pierre Moscovici today in Paris.

PSA Peugeot Citroen, whose shares have dropped 60 percent in the last year, saw its shares advance as much as 5.1 percent following Moscovici’s statements. Banque PSA Finance, which provides loans to Peugeot customers and dealers, has 5.76 billion euros ($7.56 billion) in credit lines from banks maturing in the next two years, according to Peugeot’s first-half earnings report. The Sochaux-based manufacturer is cutting 8,000 jobs and closing a factory near Paris as it is burning through 200 million euros of cash each month.

Peugeot said it is looking for ways to provide Banque PSA Finance “with a level of financing sufficient to ensure the continued smooth functioning” of operations, following Moscovici’s statements. Peugeot spokesman Jean-Baptiste Mounier said the company’s goal is a solution that allows it to continue providing competitive car loans and keep its dealer network intact.