Monte dei Paschi core capital fell to 6.5 percent in Q1

MILAN (Reuters) - Italy's Monte dei Paschi di Siena, which is being bailed out by the government, said on Thursday its core capital had fallen to 6.5 percent at the end of the first quarter, well below a 10.75 percent minimum requirement set by the European Central Bank.

The lender, which posted a net loss of 169 million euros in the January-March period, said it had managed to claw back some 5.5 billion euros in current accounts and deposits after suffering outflows for 28 billion euros in 2016. Even so, direct funding was 10 billion lower than its March 2016 level.

The Rome government is set to take a 70 percent stake in the bank, pumping 6.6 billion euros to fill the bulk of an 8.8 billion euros capital deficit. The rest of the money will come from the forced conversion of subordinated bonds into shares.

But the state aid scheme still needs to be approved by the European Commission, which must also give its green-light to the bank's restructuring plan. Sources say the process is likely to take until the end of May.

(Reporting by Silvia Aloisi; editing by Francesca Landini)