Podgorica, Montenegro - The Montenegrin government was set to extend a 40 million-euro (50.8 million-dollar) bailout loan to a local bank controlled by Prime Minister Milo Djukanovic's family, reports said Monday.

The decision to pump in cash and keep the Podgorica-based Prva Bank liquid would be formally made during the week, the daily Vijesti said.

The loan was being prepared under the rules laid out amid the global financial troubles. Authorities would have direct control over the bank's activities and shareholders would have to collateral their capital to the state.

According to law, the loan cannot last longer than one year and is approved with interest identical to that of the European Central Bank.

Djukanovic's brother Aco is the largest shareholder with a 46,4 per cent stake. The premier also has an interest in the bank, holding 2.86 per cent its capital, nominally valued at 46,7 million euros.

Of the 11 Montengrin banks, the Prva is the only one to request government assistance so far. It came under pressure over bad credits - which multiplied in numbers as the global crisis aggravated the effects of a burst bubble on the local financial market. (dpa)