MILAN (Reuters) - Banca Monte dei Paschi di Siena (MI:BMPS) has received a green light from the European Central Bank (ECB) to press ahead with a 3 billion euro ($3.4 billion) share issue and pay back a final 1.07 billion euro installment of state aid.
Italy's oldest bank is aiming to launch the cash call to plug a shortfall unveiled by the ECB and reimburse state-backed bonds that had helped keep it afloat.
"After reimbursing last year 3 billion euros (of state aid), this final tranche will allow the full repayment by Monte Paschi of the state aid," it said in a statement on Wednesday.
The lender said it planned to launch the share issue as soon as possible, hopefully before the end of May.
Monte Paschi's finance chief said earlier this week the rights issue could be launched on May 25 if ECB approval was forthcoming.
The bank, which has lost 14.6 billion euros since 2011, emerged as the weakest lender in a Europe-wide review of banks last year. On Monday it said it was starting to see early positive signs from a painful restructuring.
It has been selling assets, closing branches and cutting jobs to boost its finances and is ready to take part in a consolidation of Italy's banking sector.
Strategic advisors had been appointed to help it identify a partner, the bank said in its statement.
Reimbursement of the final tranche of the state-backed bonds would be completed ahead of time, it said.
The aid, provided in 2013 in the form of so-called "Monti Bonds", named after former Prime Minister Mario Monti, was due to be repaid in three tranches between 2015-2017.
($1 = 0.8804 euros)