Monte Paschi state aid provisions come into force

ROME Wed Dec 12, 2012 4:23am EST

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ROME Dec 12 (Reuters) - The Italian government attached a provision freeing 3.9 billion euros ($5.07 billion) in state aid to Banca Monte dei Paschi to a decree published in the Official Gazzette on Wednesday, ensuring that the bank has vital funds to strengthen its finances.

The decree comes into force immediately but must still receive approval from parliament within 60 days and is likely to be attached to a budget law expected to be passed in parliament by Christmas before the government of Prime Minister Mario Monti resigns.

The decree will allow Monte Paschi to pay the interest on loans -- known as "Monti bonds" -- from the government with a mixture of cash, shares issued at market value and more Monti bonds. ($1 = 0.7693 euros) (Reporting By Giuseppe Fonte, editing by Jennifer Clark)

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