Italian govt approves aid for troubled Carige bank

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Rome (AFP)

The Italian government late Monday adopted measures to come to the aid of floundering lender Banca Carige.

The measures agreed at a cabinet meeting follow on from the recent decision of the European Central Bank to install temporary administrators at the Italian bank, the government's statement said.

The ECB said on Wednesday it had appointed three temporary administrators "to steer the bank in order to stabilise its governance" after most of the bank's board resigned.

The government in Rome said its measures aim to allow these administrators "to take the initiatives needed to preserve the stability" of the bank.

Carige would be able to obtain "some State guarantees" or "financing" from the Bank of Italy, the statement said.

Italian market watchdog Consob has halted trading in Carige's shares which plunged after its board failed to agree on a capital increase, with its biggest shareholder the Malacalza group abstaining from the vote.

The 400-million-euro ($467 million) capital increase was one pillar of a restructuring plan approved by the ECB.

Issuing new shares would have been the fourth such move in five years, a period that has also seen several chief executives come and go.

Weighed down by the turmoil, Carige shares have lost almost 90 percent of their value over the past three months on the Milan stock market to trade at well below one euro cent.

And rating agency Fitch in October lowered its credit rating to CCC+ with a negative outlook, warning that bankruptcy was "a real possibility".