European Investment Bank puts loans to VW on hold

European Investment Bank puts loans to VW on hold

BRUSSELS - Reuters
European Investment Bank puts loans to VW on hold

AP photo

The European Investment Bank (EIB) has stopped loans to Volkswagen pending an investigation into whether some of its previous funding could have been used by the German carmaker to cheat diesel emissions tests.

Volkswagen (VW) has been embroiled in scandal since September when it admitted to cheating U.S. emissions tests for some diesel vehicles using software known as “defeat devices”.

While no link had been proven between any EIB loans and defeat devices, the bank cannot yet exclude a connection between the banned software and “part of a 400 million euro EIB loan,” EIB President Werner Hoyer told reporters in Brussels.

The loan was repaid in full by VW in 2014.

“To be on the safe side, we have decided to put on hold any new loans to Volkswagen for the time being,” Hoyer said, adding findings would be assessed “at the latest within a year”.

The EIB is the largest multilateral borrower and lender by volume and its policy is to provide favorable loans for sustainable investment projects in line with EU policy.

VW faces multi-billion fines over the emissions scandal.

Last month, sources familiar with the matter said VW had agreed a 20 billion euro bridge loan with 13 banks to help shoulder the costs of the scandal.