ROME—Troubled lender Banca Monte dei Paschi di Siena SpA said late Sunday it will reopen a debt-to-equity swap offer, as part of a last resort attempt to complete a €5 billion recapitalization to stay afloat and avoid being bailed out by the Italian government.

The bank is racing against time to complete its capital raise by the end of the year, after the European Central Bank, which supervises large eurozone lenders, rejected MPS' request for more time to complete its plan.

The ECB had granted MPS until the end of the year to raise the additional capital it needs as part of a major overhaul at the bank, which includes the sale of €28 billion worth of bad loans.

The bank had already offered its bondholders to swap €4.3 billion worth of subordinated, or riskier bonds, into shares. However, the bank raked in only €1 billion in fresh capital from the previous conversion offer.

Now it said it would open it again, after receiving regulatory authorizations, targeting investors "who had shown interest," it said in a statement.

MPS plans have been complicated by a government crisis—and the uncertainty it unleashed—prompted by the Italian's rejection of constitutional reforms in a referendum a week ago.

On Sunday, Italy's President Sergio Mattarella asked departing Foreign Affairs Minister Paolo Gentiloni to form a new government in a bid to quickly end a political crisis triggered by a 'no vote' in last week's constitutional referendum.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

December 11, 2016 20:05 ET (01:05 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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