The European Commission approved a plan to restructure Banca Monte dei Paschi di Siena. Now the Italian government has possibility to save one of the country's largest and fragile banks.
During the negotiations between Italy and the EU there were doubts that the recovery plan for the bank was good enough, as the management of Monte Paschi in December could not raise funds from private investors before the scheduled time to clean its balance sheet of non-performing loans.
A Monte Paschi capital shortfall is 8.8 billion euros ($ 9.9 billion), which will be partially replenished by converting "junior" bonds worth about 2 billion euros in shares. The remaining funds will be injected by the Italian government, which will eventually own a stake of around 70 percent in the bank.