Italian bank Intesa Sanpaolo is expected to give a preliminary green light at a board meeting on Tuesday to a state-backed 6.3 billion euro (5.6 billion pounds) three-year loan for Fiat Chrysler, a source close to the matter said.

Fiat Chrysler (FCA) earlier this month said its Italian unit was working with Rome and Intesa Sanpaolo, Italy's biggest retail bank, to obtain state guarantees on a loan facility designed to help the group's operations in the country and the whole Italian automotive industry.

Before the loan is granted, FCA's Italian unit will need to complete the approval process with Italy's export credit agency SACE, through which the state provides its guarantee, and then obtain a final authorisation and conditions for the loan from the Treasury.

The loan would be part of more than 400 billion euros in bank credit that Italy is making available to businesses under an emergency liquidity scheme to support the economy in the face of the coronavirus emergency. To qualify, companies must agree not to pay dividends this year.

FCA has cancelled its 1.1 billion euro planned dividend on 2019 earnings.

(Reporting by Valentina Za, additional reporting by Giulio Piovaccari; writing by Giulio Piovaccari; editing by David Goodman and Emelia Sithole-Matarise)