Italian lender Monte dei Paschi di Siena (MPS) is mulling to raise €2.5bn ($2.6bn) to support a new recovery plan, reported Reuters.

The new plan to 2026 for the troubled lender seeks to reduce costs, recapitalise the bank and trim workforce to change fortunes.

MPS CEO Luigi Lovaglio was quoted by the news agency as saying: “I’m here to attempt to solve a problem. I think we’re on the right track to solve the MPS problem, hence to solve a problem for taxpayers.”

The bank is 64% owned by the government. A previous plan to sell MPS to UniCredit did not materialise.

The Italian government subsequently sought an extension to the 2021-end-deadline to privatise the bank.

Lovaglio expects that the government will soon reach a new understanding on a new deadline with the EU authorities.

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By GlobalData

Under the new plan, MPS will close 11% of its branches and trim its workforce by 4,200 people.

MPS said that the redundancies will be voluntary and will cost the company €800m.

The steps will help the lender to reduce costs.

Additionally, MPS plans to simplify bank’s structure by merging other units MPS Capital Services, MPS Leasing & Factoring and the IT services unit into the group.

It will also look to sell a bad loan portfolio of €1.3bn.

Over the plan’s life to 2026, MPS aims to register an average revenue growth of 2% annually.

Dividend payments are expected to commence from 2025.