Italian banking major UniCredit may acquire struggling domestic peer Banca Carige if the government offers financial support, two sources familiar with the matter told Reuters.
The report comes within a week after the Italian government set up €1.3bn fund to support Carige, which failed to raise required funds.
Earlier this month, the bank was placed under temporary administration by the European Central Bank (ECB).
One of the sources told the news agency told that UniCredit has already been approached by the regulators and Carige advisers for a merger. However, the offer has been turned down by the bank.
But the source added that UniCredit may be encouraged to buy Banca Carige with state support. However, UniCredit refused to comment on the matter.
Currently, the three commissioners, appointed by the ECB post-administration, are also assessing merger options to revive the bank.
Leaders of two parties of the ruling coalition in Italy opined that the lender can be nationalised by infusing public funds.
The tenth largest bank of the country, Banca Carige was placed under temporary administration after its board members resigned from their posts.
ECB then appointed three temporary administrators and a three-member surveillance committee in charge of the banking operations.
In November last year, it raised €320m from other Italian banks through Italy’s depositors guarantee fund (FITD).