Italian bank Monte dei Paschi says capital gap bigger than expected

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 €8.8bn, well above the €5bn 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 €20bn fund approved by parliament to ensure the stability of banks.

Monte dei Paschi had failed to raise enough capital independently.