Brazilian bank to lend 230 mln dollars to Volkswagen

Brazil's National Economic and Social Development Bank (BNDES) said on Wednesday it would lend 230 million U.S. dollars to German carmaker Volkswagen, whose Brazilian unit was threatening to cut 6,500 jobs.

Bank President Demian Fiocca said that the lending, a part of the General Financial Program for the Modernization of Brazilian Industry, had already been approved when the sackings were announced.

In May, Volkswagen announced a restructuring plan aimed at increasing profitability, saying that it wanted to reduce productions for export and trim labor costs, cutting thousands of jobs through 2008.

According to Fiocca, a clause was written into the loan agreement that in case of widespread retrenchment plans, Volkswagen must show the bank a proposal, concerning how it plans to re-train or re-employ the technical staff, and how it will relocate the sacked staff.

The BNDES officials have spoken to unions and the Labor Ministry on developing new types of financing, which will help boost auto exports, in a bid to retain Brazilian jobs, said Fiocca.

Volkswagen operates five factories in Brazil, employing 22,000 workers. In 2005, the automaker produced 646,812 vehicles in Brazil.

Source: Xinhua