ECB: Italy’s MPS bank needs €8.8 bn

Ailing Italian bank Monte dei Paschi di Siena (MPS) needs to fill a larger capital gap than originally reported, the Italian bank stated late Monday citing new figures from the European Central Bank.

The amount needed to rescue the Europe‘s oldest financial institution is €8.8 billion ($9.2 billion). 

It previously reported that it needed to raise 5 billion euros (5.2 billion dollars) by the end of the month to make up for large-scale write downs on a mountain of bad loans. The request of €8.8 billion of fresh capital was decided on Thursday, December 22, in the last meeting of the ECB’s Supervisory Board. 

Even for the smaller sum, MPS failed to find private investors, paving the way for a state rescue and de-facto nationalization.

Last week, the Italian government led by Paolo Gentiloni, the centre-left prime minister, approved the use of up to €20bn in public funds to help stabilise the most fragile financial institutions, which are saddled with non-performing loans dating from the country’s lengthy and deep recession.