March 11, 2020 / 3:46 PM / 3 months ago

Europe plans multi-million-euro loans for Coronavirus-hit firms: sources

People walk in an office in the financial centre of Canary Wharf in London, Britain March 6, 2020. REUTERS/Kevin Coombs

PARIS/BRUSSELS (Reuters) - European companies grappling with the impact of Coronavirus could soon qualify for multi-million-euro loans backed by the European Union and big banks in a scheme poised to get waved through in days, according to people familiar with the matter.

The plan, which is under discussion and has not been finalised, would revolve around the European Investment Bank (EIB), a powerful institution backed primarily by Germany, Italy and France as well as the other 24 EU members.

One option under consideration would see the EIB team up with some of Europe’s biggest banks to jointly provide hundreds of millions of euros of affordable loans, the people said. Discussions with those banks are now under way.

To solve the risk of default rebounding on the EIB, which could tarnish its top-notch credit rating, the project could draw on the EU bloc’s joint budget to cover potential losses if, say, a hotel taking the loan ultimately went bust.

European Union finance ministers could consider whether to give the plan a thumbs up when they gather for meetings slated for Monday and Tuesday in Brussels, one of the people said.

A spokesman for the EIB declined to comment.

A spokesman for the European Commission said “helping hard-hit businesses ... to provide short-term liquidity is a key part of the EU’s economic policy response to the Coronavirus crisis”. He said it was working on options with the EIB that could be implemented immediately.

Additional reporting by Leigh Thomas in Paris; writing By John O'Donnell; Editing by Toby Chopra

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