Italy’s Monte dei Paschi bank has said it will try to raise €5bn (£4bn; $5.3bn) from investors by year end as it races to avoid a state rescue.
In a statement, the world’s oldest bank said it would stick to the recovery plan it outlined on 25 October, which includes issuing new shares.
The bank had sought a three-week extension until 20 January to seal a private sector rescue plan.
But the European Central Bank is reported to have rejected the request.
The Reuters news agency said the ECB’s supervisory board had rejected the request because it believed Rome needed to act and that giving the bank more time would achieve little.
Monte dei Paschi is one of several big Italian banks struggling with a heavy burden of bad loans that are unlikely to ever be repaid.
The banks are trying to unload some of these loans by selling them to investors that specialise in dealing with problem debt.
Some, including Monte dei Paschi, are also trying to raise new capital to strengthen their financial foundations so they can better cope with losses on their problem loans.
Bonds for shares
Monte dei Paschi came out of a recent European Central Bank assessment worse than any other major lender.
In its statement, the bank said it would now try to raise money by asking investors to swap their bonds for new shares in the bank.
The bank used his method to raise €1bn from institutional investors last week and is now planning to extend the offer to retail investors, pending the approval of Italian market watchdog Consob.
If the plan fails, the Italian government could be forced to inject billions of euros into the bank to avoid it being wound down.
Last week’s referendum result has made life even more challenging for the banking sector, after the country voted against Prime Minister Matteo Renzi’s proposed constitutional reforms and he resigned.
Italian Foreign Minister Paolo Gentiloni has now been appointed Prime Ministerby the country’s president.