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FRANKFURT, Germany (AP) — Shares in troubled Italian bank Monte dei Paschi di Siena plunged Friday following news reports that the bank's request for more time to raise new capital from investors had been rejected by regulators. But the bank said it hadn't received official notification and was planning to hold another board meeting on Sunday.
MPS, as Monte dei Paschi di Siena is known, had been given until the end of the month to raise 5 billion euros ($5.4 billion) in capital. The bank asked the European Central Bank for a delay until Jan. 20 due to political uncertainty ushered in by the resignation of Prime Minister Matteo Renzi this week.
In a statement late Friday after an emergency board meeting, the bank said it hadn't "received any communication" from the ECB and was continuing its normal activity as a result. It called another meeting for Sunday.
Shares in MPS fell 10.6 percent Friday to 19.50 euros after being down as much as 16 percent and temporarily suspended from trading.
Renzi quit after voters rejected constitutional changes he backed. It appears that some investors were cautious about committing money to MPS while it was uncertain who would lead the government next.
Failure to obtain private capital would raise the possibility that the Italian government would have to bail out MPS.
The ECB had no immediate comment Friday.
A bailout threatens to be politically explosive because new European Union rules could force losses on the bank's bondholders as a condition of permitting state aid. Many of the bondholders are small retail investors who may not have been sufficiently aware of the risk of losing their money.
Losses inflicted on small investors could bolster popular support for the main anti-EU party, the 5-Star Movement, which polls indicate could do well if early elections are held. The government could offer some kind of compensation to small bondholders.
The volatility came as Italian President Sergio Mattarella continued sounding out political leaders about prospects for forming a new government. Friday's consultations involved leaders of mostly smaller parties.
Mattarella meets with the heads of Parliament's major parties Saturday, including Renzi's Democrats, who still hold a majority, and the populist 5-Star Movement, which gained the most from Renzi's drubbing.
By early next week, Mattarella is expected to decide who should receive the mandate to try to form a government until elections can be held.
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