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Italy government watching Monte Paschi carefully: source

People are reflected in the window of a Monte Dei Paschi Di Siena bank in Rome January 29, 2013. REUTERS/Max Rossi

ROME (Reuters) - The Italian economy ministry is monitoring the situation at troubled lender Banca Monte dei Paschi di Siena (BMPS.MI), a source close to the Treasury said on Tuesday, ahead of a board meeting to discuss a planned capital increase.

The board of the bank is expected to meet later this week to discuss the timing of a 3 billion euro ($4.12 billion) capital increase after its top shareholder raised pressure to delay the issue, sources said on Monday.

Italian daily Il Sole 24 Ore said on Tuesday Chairman Alessandro Profumo and Chief Executive Fabrizio Viola were ready to resign if the timing of the cash call were pushed out.

(Reporting by Giselda Vagnoni)