The put out bank is teetering on the edge of a full-scale meltdown after failing to elevate £4.2billion from private investors in a last-ditch effort to influenceable without state intervention.
To stop nic ripping through Italy’s banking set, the government is now set to inject €20bn (£17bn) into the most vulnerable lenders.
Prime Upon olo Gentiloni’s new government is expected to meet this week to egress an emergency decree to pump cash into MPS in an effort to avoid act of God.
MPS is saddled with around €40bn of bad loans on its books and was judged to be the weakest bank in Europe earlier this year by the European Dominant Bank (ECB).
Yesterday the lender announced it only had enough cash on taps to keep it going for another four months, with just €11billion (£9.27bn) of liquidity liberal.
But the ECB is set to wind the bank down if it doesn’t raise extra cash by the end of year.
A mental breakdown of Italy’s third largest lender would almost certainly present to contagion across the eurozone, a prospect that is forcing Rome to act.
But the bailout is set to take devastating losses for Italian pensioners and savers, which could trigger a stark backlash against the government.
Under European Union (EU) rules a state-backed release of banks must now be accom nied by losses for MPS investors, many of whom are original Italians.
Michael Hewson, chief market analyst at CMC Markets UK, prognosticated: “Whatever happens in the next few days whatever plan is implemented won’t answer the underlying problem in Italy, which is it has too many banks and too much bad accountable, across the entire sector.”