MILAN (Reuters) -The fund that owns ailing Italian lender Carige on Monday approved the sale of its stake to BPER Banca, a source close to the matter said, in a deal that will end a seven-year crisis at the regional lender.

BPER, Italy’s fifth-largest bank, last month entered exclusive talks over Carige with Italy’s FITD depositor protection fund, which owns 80% of the bank since a 2019 rescue financed by the industry.

After roughly halving its initial capital injection request, BPER has said it would take on Carige at a token 1 euro price provided FITD pumps 530 million euros into the Genoa-based lender to cover restructuring and clean-up costs.

BPER, which is being advised by Mediobanca and Rothschild, will then buy out remaining investors in Carige at 0.80 euro a share.

Together with bigger rival Monte dei Paschi di Siena, Carige was one the main banking headaches stopping Italy from completing a restructuring started in 2015 that has cost healthy lenders more than 10 billion euros ($11 billion) in rescue aid.

In 2019 Italian banks spent 600 million euros to salvage Carige through FITD, which has worked with KPMG on selling its stake.

The Carige deal propels BPER forward on the expansion path set out by its leading shareholder UnipolSAI, Italy’s second-biggest insurer which is looking to build a wide distribution network for its products.

Pushed by UnipolSAI to facilitate Intesa Sanpaolo’s takeover of mid-tier peer UBI, BPER last year boosted its assets by 40% by buying branches sold for antitrust reasons in the merger.

Carige will further lift BPER’s assets to about 155 billion euros, making it Italy’s No.4 bank and a more direct competitor to Banco BPM, the No.3 and a longstanding possible merger partner before the latest collapse in talks last year.

(Reporting by Andrea Mandalà; Writing by Valentina Za; Editing by Gianluca Semeraro and David Holmes)