Beleaguered Italian bank Monte dei Paschi di Siena has launched a cash call as it attempts to raise €5 billion from shareholders before the year is out.

The world's oldest bank is asking investors to buy fresh shares in the hope of avoiding a taxpayer bailout. As part of a complex survival strategy, it also wants bondholders to swap their investment for shares.

Monte dei Paschi's shares fell 8.5% in early trading on Monday morning, meaning that it was suspended from trading further on the first day of its cash call.

It had asked the European Central Bank (ECB) for more time to raise the private investment, but failed to secure a proposed extension until January 20th.

If the bank collapses, it would threaten the stability of other financial institutions in Italy, including its biggest bank, UniCredit. Monte dei Paschi was declared to be Europe's most in-danger financial institution after stress tests in July.