Italian bank Carige put under administration for capital woes

Rome: The European Central Bank took the unprecedented step of placing the cash-strapped Italian lender Banca Carige SpA in temporary administration, a move that could be a prelude to a sale or merger.

The administrators and a three-member surveillance committee will focus on reducing balance sheet risk and finding a possible partner for the bank, Carige said in a statement. The ECB has consistently told the lender that a merger would be a good option, a person familiar with the matter said, asking not to be identified because they aren’t authorised to discuss the deliberations.

Carige has struggled to reduce a mountain of bad debt, like many Italian banks. But the gravity of its troubles came to a head when the lender’s biggest shareholder, Vittorio Malacalza, rejected a plan to raise capital, prompting most of the bank’s board to resign and leading the ECB to step in.