LONDON/MILAN (Reuters) - Banca Monte dei Paschi di Siena
Monte dei Paschi, Italy's third-largest bank by assets, was forced to take 4.1 billion euros of state aid to stay afloat after getting hammered by the euro zone crisis and a set of hazardous derivatives deals now at the center of a criminal investigation in Italy.
The European Commission, which rules on state aid in the European Union, has demanded the bank carry out the capital increase, which is more than twice the amount originally envisaged, in exchange for approving the rescue plan.
The EU's executive has also requested a tougher restructuring plan, which Monte dei Paschi unveiled earlier this month.
Failure to convince investors to subscribe to the capital increase will result in nationalisation of the bank as the state aid was offered in the form of convertible loans that would be turned into equity.
So far French Insurer Axa
Monte dei Paschi Chief Executive Fabrizio Viola said earlier this month a formal road show with investors was likely to start only after the bank's third-quarter results on November 14.
Monte dei Paschi declined to comment.
(Reporting by Sophie Sassard in London and Silvia Aloisi in Milan, Writing by Lisa Jucca; editing by David Evans)