Banca Carige of Italy announced the candidates to replace its current members of its board of directors. It said this is being done in consonance with a demand to overhaul issues by the Bank of Italy after an inspection.

According to Carige, the identified issues for change highlighted by the Bank of Italy after an inspection was conducted. These issues include the bank's exit from the insurance business, changes needed for its credit policy and the improvement of its capital base.

Furthermore, the Bank of Italy required that the mid-sized bank choose new members of its management team for the overhaul of its lending practices as well as buttress its balance sheet, according to sources who told Reuters last Tuesday.

The Italian regulatory authorities have been demanding that smaller banks, buffeted by the heavy winds of non-performing loans during the longest recession since the Second World War, to strengthen their balance sheet. This is needed in preparation for the takeover of supervision by the European Central Bank by next year.

In a statement, the bank said, "A number of measures have already been taken and others are being studied with a view to being carried out soon."