The decision, announced in a statement on Tuesday, comes days after Brussels accepted that Italy could inject up to 17 billion euros ($19 billion) to break up two insolvent Venetian banks.
Public bailouts were supposed to be a thing of the past after the eurozone created a banking union with specifically designed rules to keep taxpayers from having to bail the banks out.
Founded in Siena in 1472, BMPS has been in deep trouble since the eurozone debt crisis and will now be owned by the Italian state, which has ended up with a 70 percent stake.
EU Competition Commissioner Margrethe Vestager said the capital injection had been approved, noting it would “help BMPS meet capital needs” if economic conditions worsen unexpectedly.
The bailout is part of a rescue that the EU approved last month after BMPS failed to raise capital on the markets last year.
In exchange for the lifeline, Italy must accept a drastic EU-approved restructuring plan for BMPS that reports say involves up to 6,000 job cuts out of a total of 25,000.
The Commission said on Tuesday the plan would involve salary caps for senior managers and a demand that the bank reconfigure its business model toward a smaller retail clientele.
The plan will also see 26.1 billion euros in troubled assets set aside in a so-called “bad bank”.
Weakened by the disastrous purchase in 2007 of the Antonveneta bank, BMPS quickly drifted into scandal when its management team was accused of fraud and misuse of funds.
In addition to the bailout, authorities have also forced the bank's private lenders to become shareholders.