The European Investment Bank has stopped loans to Volkswagen pending an investigation into whether some of its previous funding could been used by the German carmaker to cheat diesel emissions tests.
Volkswagen has been embroiled in scandal since September when it admitted to cheating US 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 €400m EIB loan," EIB President Werner Hoyer said today.
The loan was repaid in full by the company 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 favourable 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 bridging loan with 13 banks to help shoulder the costs of the scandal.