France’s rescue of mortgage lender Credit Immobilier de France (CIF) guarantees its assets up to a ceiling of more than 20 billion euros ($25.21 billion), a source familiar with the matter said on Sunday.
CIF, a lender with 33 billion euros in assets whose already tenuous funding situation worsened after Moody’s Investors Service last week cut its credit rating, sought a government rescue late on Friday after a months-long search for a buyer ended in failure.
The guarantee, subject to approval by the European Commission, is the second such rescue the French government has had to arrange in recent months. France and Belgium jointly intervened last October to rescue Dexia bank and are still hashing out their respective burdens from the rescue.
The source also said CIF would stop making new loans.
“The bank cannot grant new loans, it’s a condition of the state guarantee,” the source told Reuters. “Without a buyer, the bank lacks the solid base which would allow it to access liquidity.”
That suggests that the lender is likely to be wound down and that months-long efforts to find a buyer for CIF would be definitively abandoned.