Monte dei Paschi di Siena Excludes CEO Luigi Lovaglio from Board Renewal

On March 4, 2023, the board of Monte dei Paschi di Siena (MPS) voted to exclude Chief Executive Luigi Lovaglio from the list of candidates for a new mandate. This decision followed a boardroom clash regarding the future of the recently acquired Mediobanca, a significant player in Italy's financial landscape. Lovaglio's leadership has been marked by the controversial takeover of Mediobanca, which has drawn scrutiny from major shareholders, particularly Francesco Gaetano Caltagirone. Despite Caltagirone's denial of any conflict with Lovaglio, tensions have escalated, leading to a failure to approve the financial terms of a full merger with Mediobanca ahead of a strategy day, resulting in a market selloff.

ReutersMPS, Luigi Lovaglio removed from the list: waiting for the board meeting

Lovaglio, who assumed leadership of MPS in 2022, has been pivotal in turning around the bank, which had been on the brink of collapse for nearly a decade before a government bailout. His strategy included acquiring a 14% stake in Mediobanca, which has positioned MPS at the center of Italy's financial system. The combined entity now holds a nearly €7 billion ($8 billion) stake in the prominent Italian insurer Generali. However, Lovaglio's tenure has been marred by allegations from prosecutors that he, along with Caltagirone and the Del Vecchio family's Delfin investment vehicle, coordinated efforts to gain control over both Mediobanca and Generali.

ReutersMPS, Luigi Lovaglio removed from the list: waiting for the board meeting

The European Central Bank (ECB) has given MPS the green light to prepare a list of nominees for an upcoming shareholder vote, which will determine the new board, including the CEO and chairman. The nominations committee had initially included Lovaglio in a preliminary list of candidates but ultimately removed him from the shortlist of 20 names. The decision was influenced by ongoing investigations into the Mediobanca takeover and a lack of confidence in Lovaglio's industrial plan presentation, which did not resonate with market expectations.

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Critics have pointed to the instability within MPS's leadership as detrimental to the bank's future. The exclusion of Lovaglio has raised concerns about the potential for further boardroom conflicts and the impact on MPS's strategic direction. The involvement of Caltagirone's family in the nominations committee has also drawn scrutiny, with some questioning the influence of major shareholders on the board's decisions.

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• “However, the board's nominations committee on Tuesday removed Lovaglio from a shortlist of 20 names, and a majority of directors ?on Wednesday backed the move, the sources added.” — Source

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The upcoming shareholder vote in April will be crucial for determining the future leadership of MPS. The board's decision to exclude Lovaglio marks a significant shift in the bank's governance, and the implications of this change will likely unfold as the new leadership is established.

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