ROME: Talks between UniCredit and Italy's government over the bank acquiring a stake in Monte dei Paschi have broken down, both sides said on Sunday. The parties had been engaged in exclusive talks since July over the stake in Banca Monte dei Paschi di Siena (BMPS), four years after the Tuscan lender received a state bailout.

"Despite the effort from both sides, UniCredit and the Ministry of Economy and Finance (MEF) announce that the negotiations pertaining to the potential acquisition of a defined perimeter of Banca Monte dei Paschi di Siena will no longer continue," read the brief joint statement.

The ministry had been seeking a buyer for its 64 percent stake in the world's oldest bank. UniCredit, which is Italy's second-biggest bank, was long considered by Rome as the ideal buyer, but overtures by former prime minister Giuseppe Conte failed to impress the bank's then-chief, Jean-Pierre Mustier.

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Negotiations began under UniCredit's new CEO, Andrea Orcel, who took over UniCredit's helm in April. Founded in Siena in 1472, BMPS suffered years of trouble beginning with a disastrous purchase of Antonveneta bank at twice the estimated value in 2007.

It then drifted into scandal when its management team was accused of fraud and misuse of funds. Further weakened during the eurozone debt crisis and threatening Italy's entire banking system, BMPS was rescued by the state in 2017 with a bailout that cost Italian taxpayers some 5.4 billion euros ($6.4 billion).

The bank had been weakened by so-called "bad loans" in or near default and began a period of restructuring following the expensive bailout, cutting branches and headcount. BMPS could have brought to UniCredit approximately 3.9 million clients, 80 billion euros in customer loans and 62 billion euros in assets under management.