Italy confirms Monte dei Paschi bailout

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Italy has approved a state bailout for Monte dei Paschi di Siena, its third largest bank.

The bailout gives authorisation to draw from a €20bn fund, although the size of the package has not been specified, the Financial Times reports.

The bank has been suffering from non-performing loans, but failed to secure €5bn from private investors to provide it with a capital injection to keep it afloat.

It instead raised €2.5bn from retail and institutional investors.

Junior bonds for the bank will be converted into stock under new European Union rules that do not protect bondholders in a bank bailout. It will then be converted into senior debt.