Monte dei Paschi's (BMDPY)  shareholder-approved rescue plan may bolster its share price, but management must lure bondholders and outside investors into a lender that has shed more than 85% of its value in the past year.

Shares in Italy's third biggest lender lurched further downward Friday, falling another 9.2% to change hands at  €0.2119 each as investors re-set prices in advance of a write-down of the bank's book value and further changes the capital structure of what is effectively a penny stock. The bank has also pledged to generate return-on-equity of more than 11% and net income of more than €1.1 billion by 2019. 

"Monte Paschi's new business plan mirrors old ones in that it relies on growth to achieve its targets," said Eoin Mullany, an analyst at Berenberg who rates the stock as as 'sell'. Before adding that the current economic environment in Italy means the bank will struggle to achieve its goals.

MPS has never recorded net income of more than €1 billion and the last time that it posted an ROE of 11% or more was 11 years ago. The board has said that it is aiming to pull off the rescue by the end of the year but set itself a hard deadline of end-June 2017 in the resolution put to shareholders Thursday.

Before that, however, work begins in earnest on Monday with a 100-to-1 share consolidation and a €1.7 billion capital reduction -- basically a write-down of its book value -- to cover losses arising as a result of its expected sale of bad-loan assets in the near future.

MPS will then have to persuade bondholders to swap interest bearing notes for an equity stake in an institution that has not only lost billions in value, but continues to struggle to return cash to investors or grind out a profit in the country's bank-rich economy. It reported losses in four of the last five years and its best year for earnings on record, the year 2008, saw it report net income of €998 million.

Following that, the world's oldest bank will also have to tempt new and existing investors back into the fold with a little more than €2 billion of cash-equity and agree the sale of its €27 billion bad loan portfolio in order to the rescue to be effective.

All of this will play out as investors digest the outcome of Sunday's referendum on Italian constitutional reform. 

Polls show the electorate rejecting the proposed reforms, which many see as being key to a sustained economic recovery for the nation. A rejection might force the Prime Minister to honor a previous pledge to step down if the reform-push fails, giving rise to the specter of political instability right when Monte dei Paschi needs it the least.