Administrators called in for troubled Italian bank

Temporary administrators were appointed to lead Italy's 10th largest lender, the struggling Carige, as part of a plan to avoid yet another bank bailout in the country.

The decision to appoint administrators was taken by the European Central Bank, which regulates banking in the eurozone. It followed the resignation of the bank's board majority after a failed capital-raising exercise. Italy's market regulator suspended trading in the bank's shares for the day.

Carige, which is based in the port city of Genoa, failed to win shareholder support to raise 400 million euros ($457 million) last month as part of a plan to steady the bank. Six small, regional banks have had to be rescued in recent years, with ordinary savers losing billions of euros.

The ECB named three temporary administrators "tasked with safeguarding the stability" of the bank and said the move was "an early intervention measure aimed at ensuring continuity and pursuing the objectives of the strategic plan." The administrators include the bank's chairman, Pietro Modiano, and CEO Fabio Innocenzi.

Italy's Interbank Fund for Safeguarding Savings (FITD) said a merger would be necessary to pull Carige out of its crisis.

FITD chief Salvatore Maccarone told news agency ANSA that the failure to raise capital "is proof that the overall governance mechanism has gotten stuck, and therefore this measure is the only thing that could have been done."

He declined to identify a possible merger partner. Italy's largest bank, UniCredit, declined to comment on speculation that it would buy the failing bank.

The bank, with some 5,000 employees and counting 1 million customers at its peak, launched a clean-up plan in March 2017 after posting losses for four straight quarters. But within months it found itself on the verge of bankruptcy. It was saved by a capital increase of 560 million euros.

The most recent capital increase plan was opposed by the majority shareholding Malacalza family, with a 27.5 percent share, who said they wanted details on the bank's business plan and merger options.

Maccarone emphasized that the temporary administrators had been appointed due to poor management of the bank, not for losses, noting that the bank maintained capital buffers after the fund purchased a Carige convertible bond for 320-million euros last month. It was meant to be the first of a two-phase capital increase.