Banca Monte dei Paschi di Siena (BMPS) emerged as a possible Italian white knight yesterday to counter Spain's BBVA in a struggle for control of the country's number six bank, BNL.

BBVA and ABN Amro of the Netherlands last week ripped up the rulebook for banks in Italy when they told the Bank of Italy they were considering buyout bids for their respective interests, BNL and Banca Antonveneta.

It was the first time that foreign banks had directly challenged Italy's limits on foreign banks.

Italian co-operative bank Banco Popolare di Verona e Novara dropped out of the race for BNL after failing to agree on a price for a 24 per cent chunk of the bank held by a group of property developers.

But BMPS - which owns 4.4 per cent of BNL and previously said it would not resume merger talks with its smaller, local rival -- said yesterday it was now keeping its options open.

"The takeover offer from BBVA completely changes the BNL situation," Monte Paschi chairman Pier Luigi Fabrizi said in a statement, adding there were doubts about regulatory and financial aspects of BBVA's possible all-share bid.

Newspapers had said the Bank of Italy could turn to local banks to prevent BNL from falling into Spanish hands. - Reuters