Citing sources close to the Treasury, the paper said the Treasury had told the bank it may extend the July 1 deadline for paying 360 million euros (296.25 million pounds) by a few days.

The Treasury had no immediate comment. Monte dei Paschi declined to comment.

The 540-year-old lender, which received 4.1 billion euros in state aid last year, had agreed with banks underwriting its emergency capital hike that it would pay back the interest in cash rather than shares, preventing Italy's government taking a stake.

Monte Paschi's board approved a proposal on Friday to raise the value of a share sale it is planning by 2 billion euros to 5 billion euros, to help cover any gaps a Europe-wide bank check might find in its finances.

($1 = 0.7228 Euros)

(Reporting by Isla Binnie; Editing by Rosalind Russell)