Italy's Parliament gave the green light on Wednesday for a $20.8 billion plan to prop up the country's weaker banks, starting with a bailout as early as this week for the third largest, Monte dei Paschi di Siena.

The Tuscan lender, recently judged the weakest of the European Union's major banks, needs to erase a mountain of bad loans and raise $5.2 billion in capital by the end of this month or risk being wound down by European regulators.

But its hopes of raising the money from private investors, via a debt-for-equity swap and a share placement that ends on Thursday, are fading. A failure of Monte dei Paschi would rock Italy's banking system, the eurozone's fourth largest.