Shareholders Vote to Settle Monte dei Paschi CEO Battle
Monte dei Paschi investors vote today to choose between ousted CEO Luigi Lovaglio and Fabrizio Palermo. The decision will shape the bank's future M&A strategy.
Shareholders of Monte dei Paschi di Siena are casting votes today to resolve a high-stakes boardroom conflict between the former chief executive, Luigi Lovaglio, and the board’s preferred successor, Fabrizio Palermo. The outcome of this leadership contest is expected to influence the trajectory of banking consolidation within Italy, particularly following Lovaglio’s previous efforts to position the bank for significant mergers and acquisitions.
The bank, which returned to private ownership between 2023 and 2024 after a state bailout in 2017, recently expanded its influence by acquiring Mediobanca. This move established the lender as a primary investor in the major insurance firm Generali. However, the integration plan became a flashpoint for internal friction. Sources suggest Lovaglio’s relationship with the board and major shareholder Francesco Gaetano Caltagirone soured over the specifics of merging Mediobanca into the bank’s operations. Caltagirone has addressed the tension publicly.
The disagreements are within the board.
To replace Lovaglio, the board selected Fabrizio Palermo, who currently serves as the CEO of the utility company Acea. The transition has not been without controversy. Reports indicate that the European Central Bank has expressed concern over Palermo’s limited experience in commercial banking and the overall transparency of the succession process. Such governance critiques could potentially lead to increased capital requirements for the institution should the regulator perceive significant management weaknesses.
Support for the candidates is divided among major stakeholders. The proxy advisory firms International Shareholder Services and Glass Lewis have recommended that investors support the board’s slate led by Palermo. However, they also advised voting against the current Chair and the head of the nominations committee due to the perceived lack of order in the CEO transition. Among the bank's domestic shareholders, Caltagirone is expected to use his 13.5% stake to back Palermo. Meanwhile, Norges Bank, which holds nearly 3%, has signaled its support for Lovaglio. Delfin, the largest investor with a 17.5% stake, has not yet made its position public, and the Italian Treasury, which holds 5%, intends to abstain from the vote.
