Italy to hand Monte dei Paschi CEO Lovaglio new mandate

By Valentina Za and Giuseppe Fonte

MILAN (Reuters) – Italy’s Treasury said it would confirm Luigi Lovaglio as chief executive of Monte dei Paschi di Siena, keeping the veteran banker in charge of the bank as turmoil shakes the industry.

Monte dei Paschi (MPS) is due to appoint a new board of directors on April 20 and the Treasury, which owns 64% of MPS following a 2017 bailout, on Saturday said it had filed its slate of nominees for the board.

The Treasury also indicated it would appoint as chairman Nicola Maione, a lawyer who has been an MPS director since 2017 and has previously chaired the board of state-controlled air traffic controller Enav.

During a more than 40-year career in banking, Lovaglio has risen through the ranks at rival UniCredit, where he eventually led the group’s former Polish unit Bank Pekao.

He arrived at MPS just over a year ago, when the Treasury pushed out his predecessor.

Braving turbulent markets, he steered the bank through a make-or-break 2.5 billion euro ($2.7 billion) capital raising last November, proceeding to use part of the cash to fund thousands of staff exits he agreed with unions to cut operating costs.

Lovaglio will now work to seal a merger to cement MPS’ turnaround and allow the state to meet European Union re-privatisation commitments made at the time of the bailout, a person with knowledge of the matter said.

A merger also remains the preferred option of banking supervisors to buttress MPS’ fragile profitability, a second source said.

A failed attempt to sell MPS to UniCredit has forced Italy to seek more time from the EU to cut its stake.

UniCredit continues to be widely seen as a possible buyer, though the Treasury had shifted its attention to smaller peer Banco BPM to assess the feasibility of a potential combination, sources have told Reuters.

($1 = 0.9295 euros)

(Reporting by Valentina Za in Milan and Giuseppe Fonte in Rome; editing by Michael Perry and Jane Merriman)