ROME, Jan. 8 (Xinhua) -- Italian Prime Minister Giuseppe Conte's cabinet passed a decree to provide guarantee to troubled Banca Carige, the government said in a statement on Tuesday.
The Genoa-based bank was put under extraordinary administration regime last week by the European Central Bank (ECB), which appointed three temporary commissioners and a three-member surveillance committee to take charge of it.
After gathering late on Monday, the Italian cabinet said it approved a decree allowing guarantees from the Economy Ministry on future bonds issues.
"In close cooperation with the institutions of the (European) Community, the planned guarantees will be granted in full compliance with state aid rules," the cabinet specified.
The operation aimed at allowing the commissioners "to preserve the stability and consistency of the company's governance, complete the reinforcement of the bank's assets... continue with the reduction of deteriorated credits, and pursue an aggregation."
In the statement, the government also foresaw a possible precautionary public recapitalization.
Later on Tuesday, Carige's temporary commissioners announced the bank was "in the process of applying for access to the state-backed guarantee on bonds issued."
The lender would at the same time start a due diligence on its non-performing exposures (NPEs) in order to have them cut to a ratio of 5 to 10 percent of total lending.
Finally, the commissioners said they proposed to redefine the terms of a 320-million euros (366 million U.S. dollars) debt issuance underwritten by Italy's deposit guarantee fund on Nov. 30, 2018, "so as to ensure its sustainability within the framework of the Business Plan being prepared, and in view of the planned business combination."
The Business Plan will be presented by the end of 2019, according to Carige.
The ECB's decision last week to put the three temporary commissioners in charge of the lender came after the Carige's biggest stakeholder blocked a capital increase on Dec. 22 aimed at easing growing concerns over the financial stability of the bank.
The commissioners were given an initial three-month mandate, and the ECB has suggested considering the possibility of a merger with a partner, a member of the ECB Supervisory Board told Italian business daily Il Sole 24 Ore last week.