France-based insurance major AXA is looking to invest at least €100m in Italian banking group Monte Dei Paschi di Siena (MPS), Reuters reported, citing people familiar with the matter.

The government-backed bank has held talks with AXA and asset manager Anima about their participation in MPS’ new share issue worth up to €2.5bn to boost its capital position.  

Both the French insurer and Anima distribute their products via MPS branches.

Sources told the news agency that Anima’s investment will revise its commercial agreement with MPS, whereas AXA’s investment will not lead to any changes to its joint venture agreement with the bank.

The insurance major could invest between €100m and €150m in the bank, the sources added.

The discussions, which are moving forward slowly, are at an early stage and an agreement is yet to be signed.

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In 2017, the embattled bank was bailed out by the government, giving it a 64% stake in the lender.

Of the €2.5bn, the government can contribute €1.6bn in the capital raise and the remaining investment to come from private investors as per European Union laws.

As per the report, the bank was hesitant to involve AXA and Anima as commercial ties over fee-yielding businesses could hinder its plans for a merger in the future.

Earlier the bank had planned to launch the capital raise on 10 October but now the sale is expected to start on 17 October, giving it more time to raise funds from private investors.

As part of the bank-wide restructuring, MPS will lay off some 3,500 employees via a costly early-retirement scheme.