The Italian government said Tuesday it will provide struggling Banca Monte dei Paschi di Siena, the world's oldest bank, up to two billion euros ($2.49 billion) to cover a capital shortfall.
A man takes money from a cash dispenser in Rome. The Italian government said Tuesday it will provide struggling Banca Monte dei Paschi di Siena, the world's oldest bank, up to two billion euros ($2.49 billion) to cover a capital shortfall.
The government has adopted "urgent measures to raise BMPS's capital funds," it said in a statement, as Italy struggles to stave off debt crisis contagion.
The aid was necessary because the bank had admitted it was "impossible" to find private investors to boost its funds because of "currently highly volatile market conditions" as the eurozone crisis intensifies, the government said.
The financial lifeline will allow the Tuscan bank, founded in 1472, to bring its core tier one capital ratio to 9.0 percent of total assets, thereby conforming to the rules of the European Banking Authority (EBA).
On top of the aid, Rome will substitute a loan it gave the bank in 2009 with a new loan, bringing the total amount of aid channelled into BMPS to a maximum of 3.9 billion euros.