LONDON (Reuters), – Two sources tell Reuters that UniCredit (the Italian government) and the Italy’s Government are preparing for a halt to negotiations about Monte dei Paschi, an ailing bank. The talks were stalled after attempts to agree on a cost-effective recapitalization plan failed.

One source said that Rome decided not to be able meet UniCredit’s request for a recapitalization package of more than 7 Billion Euros because this would have been too harsh for the Italian taxpayer. This source stated that disagreements over the cost and size of the job cuts at the oldest bank in the world, as well as the accountability problem over how UniCredit calculated fair value adjustments for MPS liabilities has been a major stumblingblock.

Another source claimed that the parties were unable to agree on terms based upon July’s conditions. This required UniCredit acquire certain parts of Monte dei Paschi, in order to raise UniCredit s earnings per stock by 10% and preserve its capital.

UniCredit did not respond to requests for comment. The Treasury was unavailable immediately.