The entrance of Monte dei Paschi di Siena bank's headquarter is seen in downtown Siena Thomson Reuters (Reuters) - Italy is ready to pump capital into Monte dei Paschi di Siena if the ailing bank fails to get the money it needs to remain in business from investors, a Treasury source said on Monday.

Italy's third-biggest bank is pressing ahead with a plan to raise 5 billion euros ($5.3 billion) on the market this year, despite political uncertainty in the country after a constitutional referendum triggered a government crisis.

"There is confidence at the economy ministry that Monte dei Paschi's cash call can succeed. If the operation failed, the state would carry out a precautionary recapitalisation," the Treasury source said.

"The bank's existence and its clients' savings will be preserved under any circumstances," the source added.

Monte dei Paschi said late on Sunday it would reopen a debt-into-equity swap offer that has so far raised around 1 billion euros from institutional investors.

Retail investors, who hold 2.1 billion euros of the bank's junior debt, were not able to join in as the conversion was deemed too risky for them.

In reopening the swap, Monte dei Paschi would leave retail bondholders free to take up the offer -- a risky move that could expose the lender to complaints later if ordinary Italians ended up losing money.

A source close to the bank's board on Sunday said the prospect of a new government gave Montedei Paschi confidence it could still push through its plan despite being denied an extension of the year-end deadline to raise capital by the European Central Bank.

Italy's president on Sunday asked Paolo Gentiloni, the foreign minister in the previous government, to form a new administration. Gentiloni could be ready to present his list of proposed cabinet members to the head of state as early as Monday.

With a new government in place, Qatar's sovereign wealth fund could invest 1 billion euros inMonte dei Paschi, according to sources.

However, one source close to the matter said that the bank's bid for cash on the market was a desperate move.

($1 = 0.9460 euros) (Reporting by Antonella Cinelli, writing by Valentina Za; Editing by Francesca Landini and Keith Weir)