By Giuseppe Fonte

ROME (Reuters – Italy’s Treasury has been discussing the possibility with European Union officials of extending the 2021 deadline for Rome to reduce its 64% share in troubled bank Monte dei Paschi di Siena, two sources said to Reuters.

In 2017, Italy agreed to receive a state bailout of 5.4 billion euros ($6.12billion). However, it has yet to make a formal agreement to reprivatise MPS.

The Treasury is now looking for alternative solutions after talks to sell Tuscan to UniCredit, the country’s second-largest bank.

Rome hopes to get Brussels’ support for an extended extension of the deadline for returning MPS to private hands. Sources said that this will allow the government more time to improve the bank’s profitability, and also attract new investors.

One source said that the extension sought would be for “more than two year.” Another source who was familiar with this matter confirmed the same.

MPS stock shares rose nearly 17% on Wednesday. Traders believe that MPS’s restructuring by the Treasury could be more attractive to potential partners.

Rating agency Fitch lifted a watch that had been negative on the bank on Wednesday to give it an additional boost.

Sources said that the Treasury would do everything possible to make the deadline secretive in order not to expose potential buyers waiting for the time it’s too late to offer.

However, it will extend the MPS new industrial plan timeline to 2025, provided that the EU competition authorities approve.

First of all, Treasury needs to meet the bank’s capital requirement. MPS put that at 2.5 Billion Euros.

Reuters reported October, that the total cash call for layoffs could reach 3.5 Billion. That’s more than 3.5x current market values.

The sources claimed that Rome will implement certain measures previously offered to UniCredit in a separate solution for MPS.

This plan will eliminate any remaining problem debts from the bank, and will be transferred to AMCO (state-owned bad lender manager), while Fintecna, a state agency, will assume risks from pending litigations by MPS.

($1 = 0.8839 euros)