Justifying its urgent measure to bailout the bank, the Italian government said that the bank found it "impossible" to look for investors to raise its finances amidst euro zone crisis and high volatile market conditions.
The funding of the bank is the first instance in Italy, since the onset of the euro zone debt crisis more than two years ago and is expected to bring its core tier one capital ratio to 9% of total assets.
The state funding will be provided in the form of securities, similar to Tremonti bonds, which will be issued by BMPS and will be bought by the government.
Monte dei Paschi di Siena was established in 1472, and is the third largest lender in Italy.
