ROME, Nov 20 (Reuters) - Italy's Treasury on Monday said it was placing with investors around 20% of bailed-out Monte dei Paschi di Siena, moving ahead with plans to re-privatize the world's oldest bank two years after an earlier attempt failed.

The accelerated bookbuilding sale met with strong demand and the final price discount on the shares could be smaller than a 6% ceiling set in the offer's terms, two people close to the matter told Reuters.

Shares in MPS closed little changed at 3.07 euros each, valuing the bank at around 3.8 billion euros ($4.1 billion).

The current price is 50% higher than the one at which MPS completed a make-or-break capital raising a year ago, which cost Italian taxpayers another 1.6 billion euros after they shouldered the bulk of an 8 billion euro rescue in 2017.

Chief Executive Luigi Lovaglio used cash from last year's cash call to fund thousands of staff exits, bolstering income through cost cuts.

With rising interest rates driving banks' profits to record highs, MPS has forecast net profit would top 1.1 billion euros this year.

BofA Securities, Jefferies and UBS Europe are coordinating the accelerated bookbuilding, the Treasury said in a statement.

As part of the transaction, Rome committed not to sell more shares on the market for 90 days without the consent of the global coordinators, it added.

Commitments Italy agreed with European Union competition authorities at the time of the bailout bind Rome to eventually selling its 64% stake in the bank.

Reuters was first to report in May that the Treasury was open to reducing its stake via a share sale on the market if conditions were favorable, as long as any significant new investor managed the holding in line with the national interest.

Economy Minister Giancarlo Giorgetti and Prime Minister Giorgia Meloni have repeatedly said the government would try to increase competition among banks with the privatization of MPS.

This has raised the prospect of a potential deal with other mid-sized peers, namely Banco BPM and BPER Banca , Italy's third and fourth largest banks respectively.

Both banks have denied any interest in MPS. Two years ago heavyweight UniCredit sank the government's privatization efforts, forcing Rome to seek more time from the EU.

The stake sale is seen as giving Italy more flexibility to seek a long-term solution for MPS via a merger with a rival, after negotiations with UniCredit were complicated by an impending re-privatization deadline.

Given the absence of interested buyers in the short term, the share placement emerged as the most likely option to reduce the state stake and demonstrate progress towards re-privatization commitments, sources have previously told Reuters. ($1 = 0.9168 euro) (Reporting by Giuseppe Fonte in Rome and Valentina Za in Milan; Editing by Barbara Lewis and Jonathan Oatis)