Shock, horror. Banca Carige SpA, the Italian lender that’s being administered by the European Central Bank, has failed to secure a rescue. After weeks of negotiations with BlackRock Inc., the world’s biggest money manager, it’s back to square one.

While no one emerges from this debacle smelling of roses, it shouldn’t be a surprise that a private sector solution is nowhere in sight. The BlackRock deal had the hallmarks of a desperate attempt to keep the bank afloat, postponing much harder – but inevitable – decisions about the Italian lender’s future.

The U.S. investment manager’s plan was for one of its funds to buy as much as 24.9% of Carige and get other investors to participate in a rescue share sale. What still isn’t entirely clear is who those other backers might have been and whether the 630 million euros ($705 million) that the bank wants to raise would be enough. Investors are no doubt worried about whether Carige will be a viable business even if it gets rid of its bad loans.

Take the lender’s efficiency measures. In a strategic overhaul outlined in February, Carige said it aimed to reduce its costs from a staggering 94% of its income at the end of 2018 to 59% in 2023. Hardly the most ambitious or reassuring of targets.

The details of its plan to slash expenses were equally puzzling. While they included cutting about a quarter of the workforce and closing branches, they also targeted a streamlining of the bank’s anti-money laundering procedures as part of a “lean revolution.” Given how Europe’s lenders appear to be losing the fight against financial crime, this may not be the wisest place to trim.

As for the longer-term business model, Carige envisions itself as a growing commercial lender, driven by new digital services. Reducing the time it takes to open a current account to 15 minutes by 2023 is hardly revolutionary, though; other banks already do it more quickly. While the lender also wants to be a wealth manager for the affluent, mostly through its network in the region of Liguria, it would be taking on bigger rivals with superior brands.

It’s doubtful whether new investors would be convinced by any of this. But it’s hard to feel confident in the existing shareholders turning things around. The Malacalza family, which owns 27.5 percent of the stock, was fresh to the world of finance when it bought into the bank in 2015, and the poorly governed lender has been run into the ground subsequently.

BlackRock didn’t provide a reason for pulling out. It abandoned talks after its U.S. investment committee turned the deal down, people with knowledge of the matter told Bloomberg News. That it got so close to tying up client funds in a hazardous Italian bank rescue may prompt some internal criticism.

In the meantime, Andrea Enria, the chair of the ECB’s banking supervisor, has a problem that he hoped someone else might have solved. Carige is by no means a systemic risk in Italy, given its small size. But more than 10 banks in have needed aid so far in the country, and the latest unresolved rescue might undermine confidence in the sector.

None of this is happy news for Rome’s populist rulers either. They campaigned on ending the largess to bankers, but also to protect Italian retail investors. They may have little choice but to use state funds to save Carige – unless the ECB determines it is failing or likely to fail. That latter option might prompt an orderly winding down of the bank: Painful for those involved, but Italy could do with one less zombie lender.

To contact the author of this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.

©2019 Bloomberg L.P.