Coronavirus: Fiat Chrysler primed to receive Europe's biggest carmaker bailout

Car sales in Italy plunged 98% in April 2020. Credit: Getty.

Fiat Chrysler (FCA.MI) is primed to receive a £5.6bn ($6.9bn) bailout in what would be Europe's biggest government-backed carmaker rescue deal.

Lender Intesa Sanpaolo SpA is nearing approval of the massive financial package, according to a Bloomberg report.

A board meeting to approve the deal has been scheduled for tomorrow following talks between top executives from Italian-American Fiat Chrysler and Intesa, claim Bloomberg sources.

Intesa’s approval is a crucial step but the deal will still require sign-off from trade-credit insurer Sace SpA and the Italian government.

Fiat Chrysler and Intesa declined to comment.

READ MORE: Aston Martin chief Andy Palmer reported to leave luxury car giant

The state-guaranteed loan is a credit facility for Fiat's Italian unit which lost £800m ($1bn) before taxes last year. The funds will be used to pay Fiat's suppliers further bolstering the domestic auto industry.

The coronavirus pandemic wiped out car sales in April and most of Fiat’s manufacturing plants shut during national lockdown in March and April.

If the bailout deal is approved Italy’s top lender will lead a three-year loan facility to help finance the manufacturer’s business in the country, Fiat Chrysler said in a statement earlier this month.

The plan would “provide further support to some 10,000 small and medium enterprises in the automotive supply chain in Italy,” it added.

Sace would guarantee 80% of the amount once final approval was made by the Italian finance ministry.

Carmakers have been among some of the hardest-hit industries during the COVID-19 crisis, with British firms such as Jaguar Land Rover also seeking government aid.