The rescue of Europe’s weakest bank just got a lot more expensive.
Monte dei Paschi, the world’s oldest operating bank, will require €8.8 billion ($9.2 billion) to plug a massive hole in its finances. That’s nearly twice the bailout price tag that had been expected.
The Italian lender revealed the larger sum Monday, saying it was based on an estimate from the European Central Bank.
Monte dei Paschi said last week that it had failed to raise enough capital from private investors and would need a government bailout.
Rome is now under pressure: On Monday, Monte dei Paschi said the central bank found that its financial position had deteriorated rapidly between Nov. 30 and Dec. 21.
The troubled lender warned earlier this month that it could run out of cash by May.
The Italian government has been preparing for this situation by arranging a €20 billion ($20.9 billion) rescue fund to help prop up Monte dei Paschi and the country’s other struggling banks.
The European Commission needs to give the final stamp of approval before any bailout money can go to Monte dei Paschi.
A number of smaller Italian banks are also expected draw from the €20 billion rescue fund in order to rebuild their financial positions.
Italy’s banks have been struggling with high costs and low returns for years. Billions of euros in loans have soured due to a decade-long economic malaise.
The country’s lenders are saddled with about €360 billion ($376 billion) in non-performing loans, roughly a third of the eurozone total.
Trading in Monte dei Paschi shares has been suspended since Friday.
