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Italian bank official: Nationalization is possible

Updated at: 01/29/2013 4:07 PM
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(AP) MILAN - The chairman of embattled Italian bank Monte dei Paschi says nationalizing the world’s oldest running bank remains "potentially" possible _ but emphasized managers’ commitment to avoid that outcome.

Alessandro Profumo told RAI state television Tuesday evening that the bank’s reorganization plan should ensure that it can repay (EURO)3.9 billion ($5.26 billion) in state aid and prevent nationalization.

The bank sought the bonds to help raise capital to buffer its high exposure to Italian debt. It took an additional blow with revelations of potential losses in the hundreds of millions of euros related to derivative-based trades.

Monte dei Paschi’s crisis has become fodder for the ongoing election campaign, with politicians pointing fingers over the bailout and making accusations of lack of oversight. Italy votes for a new government next month.

(Copyright 2013 by The Associated Press. All Rights Reserved.)