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Italian bank Monte dei Paschi says capital gap bigger than expected

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The increase comes as Monte dei Paschi's capital position has deteriorated in the past month (AP)

The increase comes as Monte dei Paschi's capital position has deteriorated in the past month (AP)

The increase comes as Monte dei Paschi's capital position has deteriorated in the past month (AP)

Troubled Italian bank Monte dei Paschi di Siena has said it will need more rescue money than previously expected as a government rescue looms.

The bank said in a statement that the European Central Bank had estimated its capital shortfall at 8.8 billion euros (£7.5 billion), well above the 5 billion euros (£4.3 billion) Monte dei Paschi had been planning to raise.

The increase is due to the fact that Monte dei Paschi's capital position has deteriorated in the past month, apparently as customers withdrew deposits.

Italy's government on Friday said it was guaranteeing all the bank's retail customers with part of a 20 billion euro (£17 billion) fund approved by parliament to ensure the stability of banks.

Monte dei Paschi had failed to raise enough capital independently.

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