The Italian Treasury is still in talks with the European Commission to further reduce Banca Monte dei Paschi di Siena SpA's stock of soured debt, the bank's CEO Marco Morelli told Reuters, following media reports claiming the negotiations had faltered.

Italian daily newspaper la Repubblica reported earlier in the day that the EC had rejected the Italian Treasury's plan and that the lender had received expressions of interest from two private equity funds, Reuters said, adding that one of its sources had confirmed the expressions of interest.

The Italian government has been in discussions with the EC over a plan to spin off roughly €10 billion of Monte dei Paschi's bad loans into a separate company, which would then be merged with state-owned loan manager AMCO, formerly known as Società Per La Gestione Di Attività - S.G.A. SpA.

Sources told the newswire that the talks are currently focused on determining whether the scheme complies with EU rules on state aid.