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Carige shareholders approve third cash call since 2014

GENOA, Italy, Sept 28 (Reuters) - Shareholders in Banca Carige approved on Thursday a new share issue for up 560 million euros ($660 million) which the Italian bank must complete by the end of the year to meet regulatory demands.

Carige is the last large Italian bank still in difficulty after the government this year rescued bigger rival Monte dei Paschi di Siena and liquidated two failing regional banks.

This is the third cash call for the Genoa-based bank since 2014 when, together with Monte dei Paschi, it was found short of capital in an industry check-up by the European Central Bank.

Heavily exposed to the local economy, Carige has lost nearly 2 billion euros in the past four years hit by loan writedowns and slumping revenues.

It now aims to raise a total of about 1 billion euros, an initiative that will include asset sales and a debt conversion offer that kicks off on Friday.

Shareholders on Thursday backed a proposal by top investor Vittorio Malacalza, a local businessman that owns 17.6 percent of Carige, to offer the new shares to current investors first.

Asked if he planned to buy into the share issue, Malacalza said: "There is an interest obviously, or we wouldn't be here. We'll make our assessments."

Carige will later on Thursday set conditions at which it will offer to convert up to 510 million euros in junior bonds into senior debt with a lower nominal value.

Rival Intesa Sanpaolo and insurers Assicurazioni Generali and Unipol hold a chunk of the debt targeted by the swap and their willingness to take up the offer could be key for its success.

None of the three has committed so far. The bond swap is an essential element of Carige's capital strengthening and the bank has warned its business could be at risk if its plans failed.

Carige CEO Paolo Fiorentino hinted at dire consequences if bondholders spurned the conversion offer.

"They need to consider how to best preserve their own investment," he said.

($1 = 0.8483 euros) (Writing by Valentina Za; Editing by Edmund Blair)