Italy in €2bn bail out for world's oldest bank The Italian government provided the sum by acquiring newly created bonds from the Tuscan bank, which can be converted into equity at the lender's request. The Italian government is also rolling over a €1.9bn loan for the bank, bringing total state support to €3.9bn. Founded in 1472 by the magistrate of Siena as a lender to the poor, the bank had told the Italian central bank that it could not meet the 9pc core Tier 1 capital requirement, stipulated by the European Banking Authority. The EBA found Monte dei Paschi had a capital shortfall of €3.3bn. The bank, which today has more than 1,900 branches across Italy, admitted it had been "impossible" to find private investors due to the "currently highly volatile market conditions." Having been forced to step in, the Italian government approved a decree that will allow banks to boost capital ratios by selling bonds to the state. Such funding requires European state aid approval. The Government said the move was "so Italy can respect the commitment made with the European Union to reinforce the banking industry." "The government measure is clearly being done to help Monte Paschi," said Angelo Drusiani at Banca Albertini Syz & C. "I don't think other banks need to apply for these securities to raise capital."