Siena, January 29 - Prosecutors investigating managers at troubled Italian lender Monte dei Paschi di Siena (MPS) expressed alarm at their findings but divulged few details Tuesday. "I can't say anything, the situation is explosive and tension-filled. We're talking about the third-largest bank in Italy," said Siena Prosecutor Tito Salerno. According to judicial sources Tuesday, prosecutors are probing former president Giuseppe Mussari as well as other executives for "fraud with respect to the shareholders of Montepaschi," as the Siena-based bank - the world's oldest - is called. The new probe is based on a series of claims presented by some of the bank's shareholders to Italy's stock market watchdog, Consob, and to the Bank of Italy, from 2008 to 2011. The claims focus on Montepaschi's takeover of smaller lender Antonveneta, which, according to investor claims, was carried out with insufficient diligence, without the "necessary authorizations required by banking laws" and for a sum - nine billion euros - which allegedly overvalued it and caused a strain on MPS's finances. The Siena-based lender is also embroiled in a crisis over lossmaking derivatives trades which could cost it some 720 million euros. The European Commission recently gave provisional backing to a 3.9-billion-euro Italian government bond issue for the bank "to preserve the stability of the Italian financial system". The bonds, dubbed 'Monti-bonds' after outgoing Premier Mario Monti, must be paid back by MPS at market rates. If they are not, the State will take out shares in the bank. MPS on Friday approved capital increases to pay back the bonds. Italian Economy Minister Vittorio Grilli on Tuesday hinted that MPS could face nationalization if it fails to pay the money back, though he ruled out a bailout. Meanwhile, authorities confirmed Monday that the bank faces at least two tax audits. The scandal has rocked the country's financial establishment and also renewed criticism of the alleged mingling of banking and politics in Italy. MPS, through its foundation, has historically been linked to the centre-left Democratic Party (PD), which has long been dominant in Siena and the rest of Tuscany.