The Italian government approved a decree on Friday to bail out Monte dei Paschi di Siena (BMPS.MI) after the world’s oldest bank failed to win investor backing for a desperately needed capital increase.
Looking to end a protracted banking crisis that has gummed up the economy, Prime Minister Paolo Gentiloni said his Cabinet had authorised a 20 billion-euro ($20.9 billion) fund to help lenders in distress – first and foremost Monte dei Paschi.
Within minutes of the late-night Cabinet meeting ending, the country’s third largest lender issued a statement saying it would formally request state aid, opening the way for possibly the biggest Italian bank nationalization in decades.
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