In a much-needed injection of funds for Sweden's struggling auto sector, three of the country's automakers Thursday are expected to get approval from the European Investment Bank for EUR1 billion in loans, a senior bank official told Dow Jones Newswires.

Volvo Cars, the Swedish unit of Ford Motor Co. (F), is likely to get backing for EUR200 million in loans, EIB adviser Mats Gunnarsson said in an interview late Tuesday. Truck makers AB Volvo (VOLV-B.SK) and Scania AB (SCV-A.SK) are likely to get the go-ahead for EUR400 million each, the maximum amount the EIB can lend any single company in a year, he said.

The EIB's board Thursday will rule on the loan applications from eight auto companies, including the three Swedish ones, he said. The board could turn down an application but seems unlikely to do so since the loans under consideration have been recommended by EIB staff.

"We only propose projects to the board that we believe in," Gunnarsson said.

He declined to identify the remaining five companies.

Volvo Cars has applied for EUR500 million, and is likely to get EUR200 million this year and the remaining amount later, he said. However, the EIB won't release the money to Volvo Cars before the Swedish government provides guarantees. Volvo Cars spokeswoman Maria Bohlin said her company and the government are still negotiating the final details of a guarantee.

Scania and AB Volvo, which sold the car unit to Ford in 1999, do not need government guarantees to get EIB loans because of their stronger credit positions.

The EIB funds are meant to finance environmentally friendly research and development projects, such as cleaner engines. For a cash-strapped company like Volvo Cars, this could free up much-needed funds, which otherwise would be used for research and development, to help tackle the immediate crisis.

The two truck makers have received EIB loans before, and for them the new loans appear less urgent.

"The EIB offers reasonable financing at good terms, especially these times when the financial market looks the way it does," said AB Volvo spokesman Marten Wikforss.

Saab Automobile AB, which owner General Motors Corp. (GM) has said it wants to offload by 2010, has applied to the EIB for a EUR500 million loan. The EIB board won't consider Saab's application Thursday.

The Swedish government has said it won't guarantee loans for Saab, which last month filed for reconstruction, unless its ownership situation is straightened out and it provides a firm business plan, and the EIB won't approve a loan to Saab without a guarantee.

"Right now, as they're owned by GM, we're not prepared to take that risk," Gunnarsson said.

Saab spokesman Eric Geers said the company is working to secure investors.

Saab now has "five, six, seven serious candidates that have announced their interest," Geers said. "And through Deutsche Bank we're actively looking for more investors."

 
   Company Web site: www.volvo.com, www.volvocars.com, www.saab.com, www.scania.com 
 
   -By Ola Kinnander, Dow Jones Newswires; +46-8-5451-3097; ola.kinnander@dowjones.com