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The
country's third-largest lender, and the world's oldest, had
asked for a three-week extension until January 20 to try to wrap
up a privately funded, 5 billion euros ($5.3 billion) rescue
plan in the face of fresh political uncertainty.
The ECB's supervisory board turned down the request at a meeting
on Friday on the grounds that a delay would be of little use and
that it was time for Rome to step in, the source said.
The Italian government is expected to intervene to recapitalize
the bank to avert the risk of it being wound down. The failure
of Monte dei Paschi could threaten the savings of thousands of
retail investors, ripple across the wider banking sector and
provoke a financial crisis in the euro zone's third-biggest
economy.
Italy faces the risk of early elections, and the prospect of an
anti-euro party coming to power, after Prime Minister Matteo
Renzi quit this week following the heavy defeat of his plan to
reform the constitution in a weekend referendum.
(Reporting by Reuters bureaus; Writing by Silvia Aloisi; Editing
by Pravin Char)
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