By Valentina Za SIENA, Italy, April 15 (Reuters) - Shareholders in Monte dei Paschi di Siena vote on Wednesday to decide a boardroom battle pitting ousted boss Luigi Lovaglio against a rival CEO
Monte dei Paschi investors reinstate ousted CEO Lovaglio at the helm
Leadership Turmoil and Shareholder Decisions at Monte dei Paschi
By Valentina Za
Lovaglio's Ousting and Return
SIENA, Italy, April 15 (Reuters) - Investors in Monte dei Paschi di Siena on Wednesday handed back the reins of the world's oldest bank to ousted boss Luigi Lovaglio, settling a boardroom clash that followed last year's takeover of rival Mediobanca.
Having led the 16 billion euro ($19 billion) Mediobanca acquisition, Lovaglio was pushed out last month after presenting in February a strategy for the joint group that envisaged a swift merger of Mediobanca into MPS to boost savings.
Shareholder Divisions and Boardroom Conflict
His plan had sparked a clash with leading MPS investor Francesco Gaetano Caltagirone, who favoured keeping Mediobanca listed, forcing shareholders to side with either Lovaglio, 70, or the MPS directors who ousted him.
"The international investors won and Caltagirone lost this time, but the worry is that the (new) board will be a stormy one," said Jerome Legras, head of research at fund manager Axiom Alternative Investments.
Board Composition and Supporters
Lovaglio's supporters won eight board seats, with backing from investors representing about a third of MPS' capital. The opposing slate secured six.
Top investor Delfin, owned by Italy's Del Vecchio family, backed Lovaglio, as did some international shareholders such as BlackRock and Norges Bank.
Lovaglio's opponents represented roughly a quarter of MPS capital, including Caltagirone with a 13.5% stake.
Reaction from Small Shareholders
Small shareholders in attendance at the vote cheered the reinstatement of Lovaglio, whom they credit with rebuilding MPS' reputation since he took the role in 2022.
"Many of you weren't here yesterday and won't be here tomorrow. But for the people of Siena it's a matter of identity," a small investor said, citing Siena's historic Palio horse race.
"Why change the jockey when they've won past races and established a good feeling with the horse?"
An Important Project for the Country
AN IMPORTANT PROJECT FOR THE COUNTRY
Italy rescued MPS in 2017 to draw a line under a decade-long crisis. It reprivatised it in 2023 to 2024, bringing in dozens of foreign funds as shareholders and some key domestic investors.
Future of MPS and Italian Banking Sector
The shareholder choice of CEO could shape the next phase of consolidation in Italy's banking sector, as Lovaglio has repeatedly said he was preparing MPS for further mergers and acquisitions.
"I'll keep working on a project that is important for Italy's financial system and the country," he told reporters.
Implications of the Mediobanca Acquisition
By acquiring Mediobanca, MPS has become the main investor in insurance group Generali, a trophy asset in Italian finance where Delfin and Caltagirone are the other two main shareholders.
Caltagirone and Delfin battled for years with Mediobanca over Generali. They both are now under investigation in Milan for an alleged secret accord to take control of Mediobanca and Generali through MPS.
Lovaglio is also under investigation for allegedly aiding their hidden pact. They all deny any wrongdoing.
ECB Concerns and Board Appointments
After stripping Lovaglio of his powers, the MPS board selected Fabrizio Palermo, CEO of utility ACEA, as the best of three candidates it had initially proposed to replace Lovaglio. All three were elected as directors on Wednesday.
Palermo's lack of expertise in commercial banking and the confusion around the CEO renewal process had raised alarm at the European Central Bank, which has the power to hike capital demands to sanction perceived governance weaknesses, sources have previously told Reuters.($1 = 0.8476 euros)
(Reporting by Valentina Za; Editing by Jan Harvey and Keith Weir)
