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ECB appoints administrators to manage troubled Banca Carige

ECB appoints administrators to manage troubled Banca Carige
FILE PHOTO: The logo of Carige bank is seen in Rome, Italy, in this March 1, 2016 file photo. REUTERS/Alessandro Bianchi/File Photo   -   Copyright  Alessandro Bianchi(Reuters)
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MILAN/FRANKFURT (Reuters) – The European Central Bank said on Wednesday it had appointed three temporary administrators to take charge of Italy’s Carige bank <CRGI.MI> in a bid to save the struggling lender after it failed to raise capital.

Genoa-based Carige last month failed to win shareholder backing for a 400 million euro (359.72 million pounds) share issue, part of a rescue plan financed by Italian lenders to shield the industry from the risk of another banking collapse.

“The ECB appointed Fabio Innocenzi, Pietro Modiano and Raffaele Lener as temporary administrators … tasked with safeguarding the stability of (Carige),” the ECB said in a press release.

The decision came after the majority of Carige’s board members, including Chairman Modiano and CEO Innocenzi, resigned over the failed cash call approval.

Italy’s market watchdog has suspended trading in Carige shares for a day on Wednesday after a request from the bank.

Shares of other Italian banks fell on the news, with Italy’s banking index <.FTIT8300> down 2.2 percent.

The European Central Bank, which supervises Italy’s 10th largest bank directly, has told Carige to complete its capital strengthening plan and seek a merger with a stronger partner.

The bank’s top investor is Italy’s Malacalza family, which holds 27.6 percent of Carige after investing more than 400 million euros for a stake worth 20 million euros at current market prices.

ECB supervisors last week met both the Malacalzas and Carige’s chief executive in Frankfurt, two sources told Reuters, though they added talks failed to yield concrete results.

Carige is Italy’s last remaining large problem bank after Rome bailed out Monte dei Paschi di Siena <BMPS.MI> in 2016 and bankrolled the rescue of two smaller lenders based in the Veneto region by Intesa Sanpaolo <ISP.MI> in 2017.

Carige has raised 2.2 billion euros from investors since 2014, piling up 1.5 billion euros in losses over the same period, mainly due to bad loans.

Carige’s troubles stem from decades of mismanagement and too much exposure to the depressed local economy. It has also undergone a string of top management shake-ups since the Malacalzas replaced a local charitable foundation as the single largest shareholder in the bank.

(Reporting by Giulio Piovaccari in Milan and Francesco Canepa in Frankfurt; Editing by Jan Harvey and Adrian Croft)

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