Monte Paschi CEO Won’t Seek New Term After April Meeting

(Bloomberg) -- Banca Monte Dei Paschi di Siena SpA Chief Executive Officer Marco Morelli will not seek a new term, leaving the bank without a leader just as it tries to find an exit from state control.

The world’s oldest lender has struggled with profitability and a legacy of bad loans since being bailed out by in 2017. Italy’s finance ministry, Paschi’s main shareholder, declined to comment on Morelli’s exit and possible successors.

Morelli told board members and managers that he won’t make himself available for a new term after the April 6th meeting, the Siena-based bank said in a statement on Thursday.

“It has been three and a half years of extraordinary personal and professional experience and engagement,” Morelli, 58, said in the statement. “The bank has taken back the position it deserves in the Italian commercial banking environment.”

Monte Paschi rose as much as 6% in Milan trading and was up 2.8% at 2.10 euros as of 2:11 p.m. amid speculation Morelli’s departure would lead to a change of direction at the bank.

Earlier today, Reuters reported that Unione di Banche Italiane SpA, the Italian lender that’s the target of a 4.9 billion-euro takeover bid by Intesa Sanpaolo SpA, could consider acquiring Monte Paschi as an alternative. The news service cited unidentified people familiar with the matter.

Asked earlier this month about a possible renewal of his mandate, Morelli said that the decision is in the hands of Ministry of Finance, though he added that after three years “it time to draw the line.”

Morelli, the former head of Bank of America Corp. in Italy, took the CEO job in September 2016 after having been a member of Monte Paschi’s senior management team when the lender was pushed to the brink of collapse. He told a parliamentary commission in 2017 that he left because of his disagreements with that group.

His decision to leave comes amid uncertainty over two major decisions that are key to the bank’s future. In December, the European Commission and the Finance Ministry agreed to postpone the presentation of a plan for the state to sell off its 68% stake in the bank “in line with the ongoing discussion regarding a bank de-risking operation.”

At the same time, the state is seeking to transfer as much as 10 billion euros ($10.8 billion) of bad loans to state-backed debt manager AMCO, with approval by the European Union expected by the end of February, daily Il Sole 24 Ore reported. The move would make Monte Paschi more attractive in a takeover or merger by significantly lowering its cost of risk.

Undermined by derivatives deals that backfired and souring loans, Monte Paschi received a 5.4-billion-euro bailout from the state in 2017. The government paid 6.48 euros a share for its stake in the bank in July 2017.

This month, Monte Paschi reported income targets that missed estimates set out in its restructuring plan, setting the stage for additional cost cuts of 100 million euros.

To contact the reporters on this story: Ross Larsen in Rome at rlarsen2@bloomberg.net;Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Ross Larsen, Keith Campbell

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