The European Central Bank appointed temporary administrators for Banca Carige SpA in a bid to stabilize the struggling Italian lender following the resignation of the majority of its board members.
The ECB's action comes as the bank faces pressure due to its weak capital position and widening losses.
Fabio Innocenzi, Pietro Modiano and Raffaele Lener were named temporary administrators, and a three-member surveillance committee comprising Gianluca Brancadoro, Andrea Guaccero and Alessandro Zanotti was also appointed by the regulator to "take charge" of the bank and replace its board of directors.
The ECB said the temporary administration serves as an early intervention measure to stabilize the Italian bank.
"The resignation of the majority of the board made the installation of temporary administration necessary to steer the bank in order to stabilize its governance and pursue effective solutions for ensuring sustainable stability and compliance," the ECB said Jan. 2.
The temporary administrators are responsible for closely monitoring the lender's situation and taking action, if necessary, to ensure compliance with capital requirements.
Italian stock market regulator Consob had suspended trading of shares in Carige on Jan. 2, ahead of the ECB's decision on the lender's governance, Reuters reported.
Carige recently failed to approve plans to boost capital after the Malacalza family, which owns a 27.55% stake in the lender through Malacalza Investimenti Srl, blocked the approval of the bank's crucial €400 million share sale at a Dec. 22 shareholder meeting.
The ECB later met with the Malacalzas but talks were inconclusive. The ECB had asked Carige to complete its plans to boost its capital and look to merge with a stronger partner.