MILAN (Reuters) - Banca Monte dei Paschi di Siena (>> Banca Monte dei Paschi di Siena SpA) will press ahead with a JP Morgan-led rescue plan, it said on Tuesday, envisaging a 5 billion euro ($5.5 billion) recapitalisation and a sale of non-performing loans.

However, the Tuscan bank did not shut the door completely on a rival capital-strengthening blueprint submitted last week by veteran banker and former industry minister Corrado Passera.

Monte dei Paschi, which emerged as the weakest lender in the latest round of Europe's stress tests this summer, needs to raise cash and get some 28 billion euros of bad loans off its balance sheet quickly to avert the risk of being wound down.

The bank spurned Passera's first, 11th-hour approach in late July, opting instead for a salvage plan arranged by JP Morgan (>> JPMorgan Chase & Co.) which had won preliminary approval from the European Central Bank.

Since then however, the JPMorgan-led plan has stalled because of scant investor interest, and Passera has come back with a revised scheme which, according to sources close to the proposed deal, has the backing in principle of private equity funds including Warburg Pincus.

Tuesday's board meeting, which was called to examine Passera's plan after he presented his new proposal to the bank on Oct. 13, lasted eight hours - an indication he may have been taken more seriously than in July.

Passera was also asked by market regulator Consob to explain his plan on Tuesday.

Passera's proposal involves a 2.5 billion euro capital increase reserved for private equity funds including Warburg Pincus and a 1 billion euro share sale to existing Monte dei Paschi investors.

"It could be a wonderful plan if it goes like it should," Passera said on his way in to the Consob meeting.

Monte dei Paschi shares were nearly 13 percent higher at the close of trading on expectations Passera's scheme would get some traction.

In a statement after its board meeting, the bank confirmed its "firm" intention to press ahead with the JPMorgan deal and present a business and capital-boosting plan to the market on Oct. 24.

However, it said that after that date, the board would proceed with an in-depth study of Passera's plan, already started by advisers.

JPMorgan is now looking at a revised proposal which would involve Monte dei Paschi raising up to 2 billion euros via a debt-for-equity swap to be launched in November, according to people familiar with the matter.

The bank would then launch a capital increase of up to 3 billion euros as early as Dec. 5, the day after a referendum on constitutional reform that could topple Prime Minister Matteo Renzi's government.

However, sources say JPMorgan appears to have so far failed to find an anchor investor that would commit money to the capital increase.

Detractors of Passera's plan in turn say his preliminary proposal is non-binding, does not name any of the private equity funds he claims are willing to invest, and is subject to due diligence.

Some sources expect the two sides to eventually strike a compromise, but others say that is unlikely to happen given time constraints and personal rivalries.

(additional reporting by Paola Arosio, Silvia Aloisi and Massimiliano di Giorgio)

By Andrea Mandala