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Italy's top financial regulators and central bank officials will hold an emergency meeting to address the growing scandal around Banca Monte dei Paschi di Siena that threatens to engulf both the country's oldest bank and next month's national elections.

Representatives from Italy's Finance Ministry, as well as the central Bank of Italy and the Commissione Nazionale per le Societa e la Borsa (Consob), the country's financial market regulator, will meet Tuesday in Rome, Reuters news agency reported citing unnamed sources, after revelations that the bank allegedly hit millions of euros in losses just weeks before a €3.9bn bailout by the government.

Finance Minister Vittorio Grilli is also slated to testify to Italian parliament over the government's role in the rescue on the same day.

The Bank of Italy approved the €3.9bn in aid Saturday just one day after Monte dei Paschi shareholders agreed to €6.5bn in capital increases for Italy's third-biggest lender that were needed to secure the loans. Prime Minister Mario Monti granted government approval of the state rescue in June after the bank failed the much-publicized Eurozone stress tests.

Monte dei Paschi - credited as being the world's oldest bank - is accused of hiding as much as €720m in potential losses tied to complex derivative trades that its former management team used prior to obtaining its first round of government support in the immediate aftermath of the global financial crisis in 2009. The Bank of Italy has said the departed management team withheld critical details of the transactions - which allegedly involved Germany's Deutsche Bank and Japan's Nomura - that may have disguised the bank's true financial condition.

Italian prosecutors are also probing the bank for potential criminal activity linked to its controversial €9bn purchase of Antonveneta from Spain's Banco Santander in 2007. Santander, which purchased the Italian assets for ABN Amro of the Netherlands just two months earlier, had valued the lender at €6.6bn.

Corriere della Sera reported that Monte dei Paschi signed a non-official deal with Banco Santander to inflate the Antonveneta price and share the gains of the controversial purchase. An unnamed Monte Paschi manager told the Italian daily he was sacked after warning the bank's managing director, Antonio Vigni, of risky derivative trades such as the one allegedly involding Nomura and known as 'Alexandria'.

"I told everybody that Alexandria was a sleeping monster that would wake up very soon," he told the Italian daily.

The scandal has also rocked the Italian political world and coloured the debate leading into next month's parliamentary elections where Pier Luigi Bersani's Democratic Party (PD) and a collection of smaller allies hold a firm lead over a group led former Prime Minister Silvio Berlusconi.

The PD's own financial trust controls around 38 percent of Monte Paschi shares and Siena, the central Italian city where the bank is based, is also one of the PD's political strongholds.

Monti, who leads a coalition of parties currently polling in third place, went as far as to demand last week that the PD take responsibility for its role in the scandal, which he put down to the "ugly ties between banks and politics".

The scandal could have even deeper implications for the 24 February vote if an expected report into its details is released, as scheduled, in the middle of next month.

Many will also be interested in any failings in oversight by the Bank of Italy, which was at the time being led by Mario Draghi, now President of the European Central Bank and soon to be the biggest financial regulator in Europe, if not the world, under newly-minted plans to create a single market watchdog.

Monte dei Paschi shares traded around 5 percent higher in Milan today at €0.276 each. The shares fell at least 23 percent between the time the hidden transactions were first reported by Bloomberg news on 17 January and shareholders agreed the capital increase on 25 January.

-Ginluca Mezzofiore contributed to this report