ROME (Independent) - Italy is set to nationalize Banca Monte dei Pashci di Siena, the world’s oldest bank.
The organization, founded in 1472, currently has five million customers but is weighed down by €360bn (£305bn) of bad debts.
Italy’s third largest lender was the worst performer in annual stress tests on 51 major lenders across the EU.
After the European Central Bank (ECB) refused to give the organization any more time to secure private funding, the Italian Government felt there was no option left but to intervene.
The value of shares for the bank plummeted 16 per cent before trading was suspended and junior bonds issued by the organization fell by half within minutes.
"The ECB is committing a grave error. It is unacceptable,” said Antonio Damiani, head of the banking union CGIL, the Telegraph reported.
"There must now be an immediate public rescue to secure Monte Paschi and head off any systemic risk for banks in trouble. This is a matter of urgent national interest,” Mr Damiani added.
There has been dismay at the ECB's decision not to provide a temporary stop-gap solution for the bank, particularly given the political crisis currently facing the nation following the resignation of Prime Minister Matteo Renzi.