France grants state guarantee to troubled Credit Immobilier
September 3, 2012, 12:15 pm TWN
PARIS -- The French government said Saturday it would grant struggling mortgage lender Credit Immobilier a state guarantee, after the group was hit by a liquidity crisis as the markets shunned its calls for financing.
Unlike banks, Credit Immobilier does not take deposits from savers, rather, it taps the financial markets for funds to lend to homebuyers.
But tightened rules aimed at averting a repeat of the financial crisis have called into question the group's financing model and a recent credit downgrade by ratings agency Moody's added to its problems, forcing it to turn to the state for help.
"To help the group CIF to respect its commitments, the state has decided to respond favorably to its request for a guarantee," said the finance ministry in a statement.
"This guarantee will be put in place under the reserve of approval from the European Commission and parliament," added the ministry.