TheCable

Monte dei Paschi di Siena (MPS), the world’s oldest bank, is at the brink of collapse, admitting that it had failed to raise €5bn (£4.25bn) from private investors as part of a last-ditch plan to rescue itself.

The bank, which was founded in 1472, has roughly €28 billion ($29.3 billion) in bad debts, and has been seeking means to spin off into a separate entity as part of a turnaround plan, after seeing its share price plunge 88 percent in 2016.

The Italian government has however taken to the rescue, with a bailout of  €20 billion ($21 billion) for the crisis-ridden banks in the country’s banking sector.

Paolo Gentiloni, Italy’s new prime minister, announced on Friday that his cabinet had agreed to the rescue and would be dipping into a €20bn fund that had already been approved by the parliament earlier in the this week.

According to UK Guardian, Pier Carlo Padoan, the finance minister, did not specify how much the rescue would cost the Italian state, but he said funds would be sufficient to cover the bank’s capital requirements.

“This will secure MPS’s capital needs and allow the bank to continue its industrial plan. Italy’s third largest bank will finally return with force to operate in support of the Italian economy and in a contest of full tranquillity for its savers and its employees,” Padoan said.

The bank, which is Italy’s third-largest lender confirmed it would request “extraordinary and temporary financial support” from the government.