The world's oldest bank has been offered assistance of up to €2 billion ($2.5 billion) in order to revive its ailing finances, it has emerged.
Banca Monte dei Paschi di Siena - which was founded in 1472 - will be provided with this bailout sum by the Italian government to make sure it is able to meet a deadline of 30 June to make up its capital shortfall imposed by the European Banking Authority.
Under the terms of this agreement, Mario Monti's administration will purchase specially-created bonds from the bank, which can then by converted into equity at the financier's discretion.
Furthermore, the government has also agreed to renew an existing loan with the lender, meaning its total support for the company is set to stand at €3.9 billion.
This state aid will not go through until it has been ratified by the European Commission, but Banca Monte dei Paschi di Siena would not be able to meet the requirements of having nine per cent of its assets in tier one capital without it.
By Tony Aynsley