ROME, Dec 29 (Reuters) - Italy, with the agreement of the European Union Commission, will delay to early 2020 the presentation of a plan to sell its stake in Monte dei Paschi di Siena, the Treasury said on Sunday, as the bank struggles to shed bad loans.
The plan for the state to offload its 68% stake in the world's oldest bank by the end of 2021 was supposed to be submitted to the EU executive by the end of this year.
The Treasury said in statement it had asked Brussels for the postponement "in the light of, and in line with, the dialogue in progress regarding an operation of de-risking for the bank."
Monte Paschi was at the forefront of Italy's banking crisis until a 2017 state bailout was cleared by Brussels, leaving the bank with a tough restructuring plan and the Italian Treasury as its main shareholder.
The bank has sold more than 30 billion euros ($33.53 billion) of bad loans since the bailout, but it still held 16 billion in soured debt mid-way through this year, some 16% of its total loans.
This stands in the way of a merger with a rival, several sources familiar with the matter have said, and complicates the Treasury's re-privatisation efforts.
At a meeting this month, Monte Paschi's board discussed the possibility that Italy may seek to delay by a year the end-2021 deadline for the Treasury to get out of the bank, a source close to the matter said.
However, a government source said this option was not being discussed with the European Commission at the moment.
Italy has been in talks with Brussels for months over a plan to accelerate the disposal of Monte Paschi's soured loans.
The Treasury's plan would see a chunk of the bank's assets and liabilities transferred to state-owned bad loan manager AMCO, but the Commission is concerned that it may break EU state aid rules.
The Commission wants the bank to shed the loans at market value, a source close to the matter said.
The plan favoured by the Treasury would instead shield the bank from losses by transferring the loans at book value while their market value would be factored in as part of a share swap between the bank and AMCO.
$1 = 0.8947 euros Reporting by Gavin Jones, Valentina Za and Giuseppe Fonte; Writing by Gavin Jones; Editing by Andrew Cawthorne