UPDATE 1-Italy'Carige to seek a buyer after CCB dropped out

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MILANO, March 17 (Reuters) - Italy’s depositor protection fund (FITD) said on Wednesday it would search a new buyer for Banca Carige after Cassa Centrale Banca (CCB) backed out of the deal in light of the uncertain market scenario driven by the pandemic.

Genoa-based Carige is 80% controlled by FITD, which is financed by contributions from Italian banks, after a rescue in 2019 saw the fund pump 600 million euros ($714 million) into the loss-making bank, for a stake now valued at 104 million euros.

Unlisted CCB invested 63 million euros for an 8.3% stake and was also granted an option to buy the FITD’s holding in Carige at a steep discount by the end of 2021.

However CCB’s interest in its rival waned after Carige’s losses tripled in 2020 compared to those expected under a business plan two years ago, due to pandemic-related loan loss provisions and writedowns of tax assets, people close to the matter said on Monday.

FITD said Cassa Centrale Banca (CCB) has decided not to exercise its option to buy out Carige’s controlling stake, confirming what a source told Reuters on Tuesday.

FITD, which cannot be a long-term investor in a bank, said it would seek “a business combination with other potential partners” for Carige.

Carige shares have not traded since early 2019 when they were suspended by Italy’s market watchdog after the bank was put under administration by the European Central Bank for a year.

Reporting by Andrea Mandalà; editing by Philippa Fletcher