FRANKFURT — The European Central Bank took control of a troubled Italian bank Wednesday, an unprecedented step that spotlighted the risks to the eurozone’s financial system from political chaos in Rome and a sputtering economy.
While the bank, Banca Carige, is a midsize lender, its fate has the potential to reverberate broadly. Among policymakers and economists looking for signs of the next crisis, Italy and its heavily indebted banks have been a source of concern for years. And the policies and statements of the populist government in Rome have recently added to the woes of Italy’s banks, and by extension, the whole economy.
“It’s not a bank large enough to cause systemic crisis,” said Lorenzo Codogno, a former chief economist at Italy’s treasury who operates LC Macro Advisors, a consultancy in London. “But,” he added, “we have seen that even small banks can cause huge problems.”
“The current government is not prepared for a full-fledged banking crisis,” Mr. Codogno said.
The action by Europe’s central bank on Wednesday reassured investors so far that the vulnerabilities of Banca Carige, the 10th-largest lender in Italy, would not provoke a broader crisis.
The central bank appointed a six-person team to manage Banca Carige, which serves the region around Genoa, after most of the bank’s board of directors resigned following the collapse of efforts to raise fresh capital. It was the first time the European Central Bank has appointed new leadership for a commercial bank since it acquired expanded powers in 2014 to supervise lenders.
The central bank’s intervention was absorbed with relative calm by financial markets. The Euro Stoxx Banks index fell about 2 percent on a day when most stocks were down.
But the question of who will buy Banca Carige — and whether shareholders will be responsible for some of its debt — is likely to heighten tensions between the central bank and Italy’s coalition government.
Finding a buyer will be difficult. If the bank’s troubles deepen, the central bank, under European rules, would be obliged to make shareholders and creditors bear some of the losses.
That could put the central bank at odds with the government in Rome. The coalition of the far-right League and the populist Five Star Movement has so far tried to defend the interests of shareholders and bondholders, who are often middle-class Italians.
Banca Carige could also create political conflict in Brussels. Sven Giegold, a member of the European Parliament who speaks for the Green faction on financial issues, called for an investigation of whether earlier attempts to rescue Banca Carige violated European Union rules on state aid.
Mr. Giegold said in a statement Wednesday that other Italian banks last year were strong-armed into providing Banca Carige with fresh capital, which proved to be inadequate.
“The coordinated rescue now looks like a waste of money by the already weakened Italian banking system,” Mr. Giegold said.
Almost all Italian banks have been struggling since the 2008 financial crisis. Monte dei Paschi di Siena, considered the world’s oldest bank, required an 8.3 billion euro, or $9.4 billion, rescue in 2017 after years of mismanagement, a surge in bad loans and allegations that top managers conspired to hide the bank’s financial straits.
The challenges facing the banks — and Italy’s economy — have increased since the populist government took power in June.
Plans in Rome to reverse cuts in pensions and give cash to poor people undercut investors’ confidence in the government’s ability to repay the national debt. As a result, investors have demanded higher interest rates on Italian government bonds.
The instability has been poison for Italian banks because the rates on government bonds act as a benchmark for all types of credit. Banks have had to borrow at far higher rates than banks in other European countries.
Banca Carige, which has roots going back to the time of Christopher Columbus, is paying an astronomical 16 percent annual interest on recently issued bonds.
The yields on Italian bonds have tempered since last month when the government backed down in a confrontation with the European Commission over its spending plan, which would have broken European Union rules on debt limits. That has eased the pressure on banks.
But the Italian economy has never fully recovered from 2008. Businesses went bankrupt then, and many borrowers lost their jobs or are earning far less.
For Banca Carige, that meant borrowers were behind in payments or not making payments at all. More than a quarter of Banca Carige’s outstanding loans are considered nonperforming.
Economists and business managers expect the economy to worsen in 2019, increasing stress on banks. A survey of purchasing managers at Italian manufacturing companies published Wednesday by IHS Markit, a research firm, showed that business conditions deteriorated in December, and “there appears little sense of optimism that the current soft patch will come to an end in the near future.”
Confidence about the future was at its lowest in six years, the survey found. “The outlook for 2019 is not encouraging,” Rosie Colthorpe, an analyst at Oxford Economics, said in a note to clients Wednesday.
At Banca Carige, temporary managers installed by the European Central Bank are expected to try to sell the institution. The bank is not considered insolvent, although it lost €189 million, or $215 million, during the first nine months of 2018 on revenue of €373 million.
The central bank’s intervention was prompted by the resignation Wednesday of a majority of Banca Carige’s board of directors. They quit after the bank’s largest shareholders, members of the wealthy Malacalza family, declined last month to support plans to raise more capital.
The temporary administrators appointed by the central bank Wednesday include the existing chief executive, Fabio Innocenzi, and the chairman, Pietro Modiano. Both had joined the bank recently. They will have more powers as central bank appointees than they would as regular managers, including the right to set the agenda for shareholders’ meetings.
“The decision to impose temporary administration is an early intervention measure aimed at ensuring continuity and pursuing the objectives of a strategic plan,” the European Central Bank said in a statement.