Banca Monte dei Paschi di Siena, the world’s oldest bank still in business, today contested a credit rating downgrade by Moody’s to “junk” status saying its financial situation was solid.

Moody’s downgraded the bank from a rating of Baa3 to a non-investment status of Ba2 on worries that the government’s recapitalisation plans will prove insufficient, saying it was probable the bank would require more support.

Critically exposed to the eurozone debt crisis, BMPS was forced in June to accept a government bailout, borrowing roughly $1.87 billion in order to pay off its debt and shore up its capital.

The bank has also said it would lay off 4,600 people by 2015.

Fabrizio Viola, director general of the bank which was founded in 1472, was quoted by Dow Jones Newswires as saying he “absolutely did not agree” with the downgrade.

“It refers to figures which have long been known and which refer to 2011 and the first half of 2012” before the bank’s restructuring plan, he said.

But his comments failed to halt a slide in the bank’s shares on the Milan stock exchange, where they were down 6.07 per cent to 0.232 euros at 1430 GMT.

The bank is highly exposed to Italian debt and is one of four European banks that failed to pass stress tests by the European Banking Authority.

The restructuring announced in June was intended to improve its standing.

Fabrizio Viola said, “Our liquidity has improved thanks to an increase in deposits in the third quarter and the lowering of rates on the bond markets has given the bank a bit of a breathing space in terms of its financing.”

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