Italy based Banca Monte dei Paschi di Siena has reported a net loss of €1.67bn for the first half of 2012, highlighting a clear reversal of trends in the credit spread of Italian government bonds over German bonds.

As at 30 June 2012, the group’s income from banking and insurance stood at EUR28.07m, decrease by 1.1% compared with EUR 31.2m in the same period of last year.

Net profit (loss) from trading/valuation of financial assets amounted to EUR272m as at 30/06/2012, versus EUR221m in the same period of last year.

The financial institution’s Net profit (loss) on financial assets/liabilities designated at fair value totalled to EUR112.4m in the second quarter of 2012.

Customer loans fell by 7.6% from a year ago, while deposits and securities that were issued declined 20%.

The core Tier I ratio was 10.8% as at 30 June 2012, while Tier 1 ratio was 11.7% compared to 11.1% in the same period of 2011, due to a reduction in RWAs reflecting the trendline in credit risk and Basel 1 floor requirement removal.

The Group has also accelerated the setup schedule of actions included in the 2012- 2015 Business Plan for a prompt relaunch of business growth.

As per the restructuring plan laid out in June this year, MPS aims to close 400 branches and 4,600 job cuts over the next three years, according to Reuters.