Bondholder bail-ins are on the way in Italy as private investors pulled the plug on a bank rescue.

Rome plans a €20 billion bank bailout, but under eurozone rules junior bondholders have to take a hit.

Please consider Italy braces for Monte dei Paschi Rescue.

On Monday night, Italy's finance minister Pier Carlo Padoan confirmed Italy is readying a €20bn rescue fund for MPS and other weak lenders as the chances of a successful €5bn private recapitalisation of the Siena-based bank recede.

By the evening of Thursday at the latest, it should be clear whether MPS, which was founded in 1472, will have been rescued by the private sector via a €4.5bn debt-for-equity swap and funds from anchor investors including the Qatar Investment Authority. As of Monday only €200m had been committed to the swap, suggesting the chances of pulling off the rescue are slim, said people close to the deal.