SIENA, Italy (Reuters) - Monte dei Paschi di Siena BMPS.MI is still negotiating with the European Commission how many jobs to cut in a radical restructuring plan that is a condition for a state rescue of the Italian bank, Chief Executive Marco Morelli said on Wednesday.

A logo of Monte dei Paschi di Siena bank is seen on the ground in Siena, Italy, November 5, 2014. REUTERS/Giampiero Sposito/File Photo

The world’s oldest bank, whose troubles date back several years, asked for state support in December after failing to raise 5 billion euros ($5.3 billion) on the market to shore up its capital.

The European Central Bank has since put the capital shortfall that the bank must fill at 8.8 billion euros. The Italian government is expected to pump 6.6 billion euros into the bank, taking a stake of around 70 percent. [nL5N1EL0X3] [nR1N1DP27R]

But for state aid to be unlocked, the European Commission must approve the bank’s restructuring and negotiations are dragging on.

Morelli’s own business plan, unveiled in October, envisaged 2,600 layoffs - around 10 percent of the bank’s employees - and 500 branch closures, but he said Brussels is demanding “a much more stringent approach” in terms of cost cuts and revenue targets. [nL4N1CV2E1]

Morelli told a shareholder meeting on Wednesday he did not know the final number of job cuts. A source close to the matter said the EU was asking for a staff reduction of more than 5,000 people.

“We are negotiating a plan that will be radically different from the one that the bank had presented to the market,” Morelli said. “We have told our counterparts that we need to find the right compromise ... Right now I am not in a position to give numbers (on layoffs).”

One big hurdle is the bank’s mountain of problem loans, which stand at 46 billion euros on a gross basis - the highest amount relative to a bank’s capital in Italy.

Monte dei Paschi’s failed capital raising last year was designed to cover losses from the planned disposal of 28 billion euros of its most toxic soured debts.

Morelli said the bank needed to get rid of such loans as soon as possible, but also said the timing and details of the sale were still being discussed as Monte dei Paschi wanted to minimize further loan losses.

He said it would take years for the bank to reverse a 28 billion euros loss in commercial deposits suffered in 2016 when customers were worried about its survival.

Italy is trying to shore up its problem banks to avoid losses for creditors and depositors that could undermine confidence in the banking system.

Monte dei Paschi is not the only Italian bank that is seeking a state bailout. Two regional lenders, Banca Popolare di Vicenza and Veneto Banca, last month also requested a so-called precautionary recapitalization by the state. The ECB has put the combined capital shortfall for these two lenders at 6.4 billion euros. [nL8N1HJ4TM]