Key investor says to go ahead with Monte dei Paschi investment

MILAN (Reuters) - A key investor in Monte dei Paschi di Siena said on Monday it had decided to go ahead with its purchase of bad loans from the lender, resolving a problem that had threatened to undermine a rescue plan for the ailing bank.

Earlier on Monday, Monte dei Paschi said bank bailout fund Atlante was rethinking its 1.5-billion-euro ($1.56 billion)purchase of bad loans from the lender, a key part of a privately-funded rescue package.

Atlante had expressed "deep reservations" over the terms of a bridge loan that Monte dei Paschi had secured as part of the sale of bad loans.

But in a statement on Monday, Quaestio, the manager of the Atlante fund, said it had decided to approve the term sheet for the senior bridge loan.

"The Quaestio board has agreed to underwrite the Highly Confident Letter for a mezzanine investment in the securitised non-performing loan portfolio of (the bank)," it said.

(Reporting by Stephen Jewkes; Editing by Crispian Balmer)