Wires

UPDATE 2-Carige shareholders approve bank's rescue package

Andrea Mandala

* ECB placed bank under temporary administration in January

* Faced liquidation or resolution without capital boost

* Rescue package funded mainly by other Italian banks (Recasts after vote)

GENOA, Sept 20 (Reuters) - Shareholders in Italian bank Carige have approved a 700 million euro ($771 million) cash call, relinquishing control of the lender to save it from liquidation after years of losses.

Carige's fourth capital increase since 2014 is part of a 900 million euro rescue painfully negotiated over the past nine months and financed for the most part by rival Italian lenders.

The outcome of Friday's meeting had hung in the balance because the bank's biggest shareholder, the Malacalza family of steel billionaires, had not made clear if they would seek to block the measures.

With a 27.5% stake, the Malacalzas had the power to again derail rescue efforts, as they had when they blocked a 400 million euro cash call in December, prompting the European Central Bank to place Carige under special administration.

"By not showing up, the Malacalzas have made today's result possible," Carige special administrator Pietro Modiano said. "It was a conscious choice and, in my view, a brave one."

Worried by the family's silence in the run-up to the meeting, thousands of small shareholders in Carige signed up to attend the gathering to counter a possible rejection. Some 20,000 people were present on Friday.

"I believe it was a last-minute decision and we had no idea until the very end," said Raffaele Lener, another of Carige's special administrators.

Based in the port city of Genoa, Carige has been in crisis-mode since 2014, when it failed Europe-wide stress tests together with rival Monte dei Paschi, which was then taken over by the government.

Weakened by decades of mismanagement and excessive local exposure, Carige has piled up 2 billion euros in losses over the past five years, mostly in loans that turned sour amid a global shipping slump and deep domestic recession.

Last year's Genoa bridge collapse, which claimed 43 lives and severed the port's main link to France, has added to the city's troubles and raised the political stakes for keeping Carige in business.

The Malacalzas had come to the bank's rescue in 2015, investing more than 400 million euros for a stake now worth only 23 million euros.

Hands-on investors, the Malacalzas pushed out three successive chief executives within four years, prompting the ECB to demand that Carige solve its governance problems.

The bank had a market value of 85 million euros when its shares were suspended from trading in January, having tapped shareholders for more than 2 billion euros over the past five years.

Under the rescue package, a fund financed by Italian lenders will now become the main investor in Carige before rival Cassa Centrale Banca can exercise an option to take it over. ($1 = 0.9077 euros) (Writing by Valentina Za Editing by David Goodman)