Fiat seeking official nod to turn financing unit into a bank

February 17, 2014 12:33 am

Italian carmaker Fiat, which has agreed to take full control of Chrysler, has asked the Bank of Italy’s permission to turn financing unit, Fga Capital, into a bank to cut funding costs, Reuters has reported, citing a source with direct knowledge of the situation. Securing a banking licence would make Fiat more competitive against rival car makers such as Volkswagen and Peugeot, which already have their own internal banks and were able to access cheap loans offered by the European Central Bank (ECB) during the euro zone crisis, the source said. Fiat has high funding costs given its ‘junk’ credit rating and is looking for solutions to cut costs and thus improve margins.