Italian Prime Minister Pablo Gentiloni had convened a cabinet meeting to request funds from the parliament hours after Monte dei Paschi di Siena (MPS) formally launched an attempt to save off government rescue. It aims to raise €5 billion from private investors.

MPS has less than 10 days to secure private funding before the government intervenes.

The government is laying the groundwork for a potential €20 billion fund to rescue the most troubled banks in the country, including MPS.

"[It] could be necessary to adopt measures with the aim of protecting savers if there were risks in the financial sector," a government-issued statement said. Parliament votes were predicted to happen as soon as Wednesday.

The news hints on a multi-billion euro refinancing of MPS possibly occurring within days. Bad loans have also been weighing over seven other banks. The loans amount to billions of euros, resulting to banks having to require government capitalization.

After the bank launched a share offering to institutional and retail investors, its shares fell 8.5% on Monday. The bank's move was in line with its plan to ask bondholders to swap their investments for shares. The bank aims to restructure €28 billion of bad loans to clean up its balance sheet.

However, Quaestio, one of the key backers of the plan, has expressed doubts. Quaestio manages the government-orchestrated bailout fund Altante. It expressed concerns on the terms of a loan to support the parceling-off of bad debts.

MPS was found to be the weakest performing out of 51 European banks subjected to stress test or financial health check. Considering this, the move could jeopardize the entire capital-bolstering exercise which is due to be completed by the end of the year. The deadline was imposed by the European Central Bank.

"If it is not possible for the bank to reach an agreement with Quaestio to resolve the issues that it has raised, the transaction would not be able to be completed in accordance with the terms and conditions of the authorization of the European Central Bank which provides for the transaction to be completed by 31 December 2016," stated MPS.

The Italian government, however, has stated that it is ready to act as a backstop to MPS. Meanwhile, Rome has insisted last week that the bank would be able to raise the funds through the markets.