Monte dei Paschi shares plunge on ECB reports

Shares in Italy's Monte dei Paschi di Siena bank have fallen following reports that the European Central Bank has rejected a request to give it more time to raise cash.

Monte dei Paschi had sought a three-week extension until 20 January to seal a private sector €5bn rescue plan.

If the ECB does deny the request, the Italian government will be under more pressure to bail out the country's third-largest bank.

The ECB declined to comment.

The Reuters news agency reported that a source said the ECB's supervisory board had rejected the request because it believed Rome needed to act and that giving the bank more time would achieve little.

Monte dei Paschi is one of several big Italian banks struggling with a heavy burden of bad loans that are unlikely to ever be repaid.

Shares in the Sienna-based lender - the world's oldest bank - were suspended in Milan for a period on Friday after falling about 11% following the reports.

A Monte dei Paschi spokesman said it had not heard from the ECB. The bank's board was meeting on Friday night and may continue its talks on Saturday.

The Italian government could be forced to inject billions of euros into the bank to avoid it being wound down.