The world's oldest bank said in a statement that as part of a "new operating model (to) focus on greater efficiency," it would reduce its branches from around 2,000 to approximately 1,400 in 2021.
The headcount would be reduced by about 5,500, falling to 20,000 over the same period.
On Tuesday, the EU competition commission approved the bailout of BMPS, which has been in deep trouble since the eurozone debt crisis. 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 rescue failing lenders.
But Brussels has determined that the bailout is in line with EU state aid rules, because BMPS's shareholders and junior creditors will also put up 4.3 billion euros in capital, thereby limiting the use of taxpayers' money.
BMPS represented the Achilles' heel of the Italian banking system, weakened by so-called "bad loans" which are unlikely to ever be repaid. EU Competition Commissioner Margrethe Vestager said the capital injection had been approved, noting it would "help BMPS meet capital needs" if economic conditions worsened unexpectedly.
In exchange for the lifeline, Italy must accept a drastic EU-approved restructuring plan for BMPS.
BMPS, Italy's fourth-biggest bank, is disposing of a total 28.6 billion euros' worth of loans in or near default.
Upon completion of the restructuring plan, BMPS's core capital ratio is expected to rise to 14.7 percent from 8.2 percent in 2016.
As a result of the injection of public funds, the Italian state will hold a 70 percent stake in the bank, though Rome has said it does not intend to hold on to the majority stake for long.