By Elena Vardon

The ousted chief executive of Italy's Banca Monte dei Paschi di Siena said continuity at the top is key to pull through a complex combination with rival Mediobanca.

"To have in the driving seat the CEO who knows the most about the project is, I believe, the best way to minimize the execution risk," Luigi Lovaglio said in an interview. "The project is solid, it is very well done, and the integration program is strong."

Monte dei Paschi, which is considered the oldest bank in the world still in operation, has been thrown into disarray ahead of an April 15 shareholder vote that will determine the leadership of Italy's newly minted third-largest banking group.

The departing board left Lovaglio off its list of candidates for the next three-year term, and proposed Fabrizio Palermo, CEO of Italian water operator Acea and former head of state investment agency Cassa Depositi e Prestiti, to take the helm.

Lovaglio, who has led the bank for the past four years, is still in the running to keep his job. He was proposed as the CEO candidate on an alternative board slate put forward by minority shareholder PLT Holding, which owns a 1.2% stake in the bank. For PLT, Lovaglio is the only executive equipped to see the complex merger through and protect shareholder value.

Proxy advisor ISS said the board showed poor succession planning during a transformational deal but backed its slate. Assogestioni, an association of fund managers, proposed a third board list.

Tensions escalated further last week when the board stripped Lovaglio of his executive powers, citing his inclusion in the PLT list as well as leadership needs. Lovaglio remains a board member.

Monte dei Paschi's business plan through 2030, which was unanimously approved by the board and presented to shareholders in late February, is at stake.

"I'm looking to the future…I'm completely focused on completing my project," Lovaglio said. "It is shaping the Italian banking system in a very innovative way."

The road map is based on the combination of Mediobanca's heft in investment banking and wealth management with Monte dei Paschi's retail-banking strength and aims to deliver 700 million euros ($811.3 million) in synergies. Delisting Mediobanca--in which Monte dei Paschi acquired an 86% stake last year after a hostile bid--is part of the plan, as is a target to distribute 16 billion euros to shareholders over the next five years.

The leadership change followed an investigation by Milan prosecutors into Lovaglio and two top shareholders over alleged market manipulation and supervisory obstruction tied to the roughly $19 billion Mediobanca bid. Lovaglio denies wrongdoing and received the support of Monte dei Paschi's board when the probe was announced last year.

"I'm sure and confident that everything will be clarified," Lovaglio said.

Lovaglio is widely credited with restructuring a bank that was once on the brink of collapse after a tumultuous period during which it was bailed out by the government. The executive also orchestrated a surprise takeover of Mediobanca.

"Investors know perfectly my track record, because normally if I commit to a plan, I execute it," he said. "They trust me. They trusted the project and they trusted my knowledge and my capability in execution."

Monte dei Paschi declined to comment on Lovaglio's remarks. It pointed to a shareholder letter in which the board explained its decision to drop Lovaglio, citing the need for leadership with skills more closely aligned with upcoming challenges and a greater openness to dialogue.

Before taking the top role at Monte dei Paschi, Lovaglio worked for UniCredit and led Poland's Bank Pekao and Bulgaria's Bulbank through cross-border integration processes. He said he hopes that his commitment to deliver on promises through a decades-long career in banking will be recognized.

Lovaglio said he aims to position Monte dei Paschi to play a role in a future wave of consolidation. "I still believe that in Italy we need to have bigger institutions."

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

April 02, 2026 11:54 ET (15:54 GMT)

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