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Italy asks for more time to save world's oldest bank

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Italy asks for more time to save world's oldest bank
The headquarers of Monte dei Paschi di Siena. Photo: Giuseppe Cacace/AFP
09:25 CET+01:00
The world's oldest bank, Italy's Monte dei Paschi di Siena (BMPS), asked the European Central Bank Wednesday for more time to raise the cash it needs to avoid being wound down.

BMPS said it was asking for the extension from the end of December to mid January because the political instability created by Prime Minister Matteo Renzi's resignation has left investors reluctant to commit funds.

The Italian bank has lost nearly 85 percent of its market capitalization since the start of the year. It also emerged as the worst performer from European Banking Authority (EBA) stress tests in July.

The country's third-biggest bank is currently trying to pull off a five billion euro ($5.38 billion) equity injection. Italy is preparing to recapitalize the ailing institution if it fails, according to reports.

BMPS said in a statement that it was "opportune - considering the change in circumstances - to ask the European Central Bank (ECB) for an extension to the authorized deadline until January 20th, 2017".

Renzi's resignation has added to deep worries about the failure of the Italian banking sector - which features no fewer than 700 banks - to make meaningful progress towards consolidation.

Non-performing loans on their books amount to a combined 360 billion euros, roughly a third of the eurozone's total bad debt.

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