A Monte dei Paschi di Siena advertisement is seen on a screen in a bank window in downtown Milan, Italy, January 14, 2016. REUTERS/Stefano Rellandini/File Photo

ROME (Reuters) - Twenty billion euros earmarked by the Italian government would be enough to cover funding requirements at all the ailing banks currently under observation by the Treasury and the Bank of Italy, a Treasury source said on Tuesday.

“The size of the fund has been set out to be fully sufficient to cover all funding needs that may emerge from the situations currently under observation,” the source said.

Rescuing its third-biggest lender, Monte dei Paschi di Siena BMPS.MI, will likely cost Italy more than initially expected as the European Central Bank has revised the bank's capital shortfall, sources said earlier on Tuesday.

The government is likely to use around a third of the 20 billion euros ($20.9 billion) set aside to rescue Monte dei Paschi, the sources said.