European Union antitrust regulators have given the the go ahead for a planned restructuring by Italian lender, Banca Monte dei Paschi di Siena (MPS).
The European Commission concluded that the bailout granted for the restructuring of the bank was compatible with state aid rules.
In December 2012 MPS received a capital injection of €3.9bn (£2.4bn) through a hybrid of different instruments which were subsequently labelled "Monti Binds."The bank also received state guarantees of €13bn (£8.1bn) under the Italian bank guarantee scheme.
Part of the bank's restructuring includes an increase in capital through a €2.5 billion (£2.1bn) rights issue as well as caps on managements pay.
Vice president of the Commission Joaquin Almunia, said in a statement:
The restructuring plan of MPS will allow the bank to return to viability by addressing the problems that led to its difficulties. Our decision should ensure that the State capital will be repaid to the benefit of the Italian taxpayers.
Shares in the bank slumped by almost seven per cent yesterday on expectations that the cash call could come as early as January.