Monte Paschi Names Lovaglio as CEO After Bastianini Ousted
Monte Paschi Names Lovaglio as CEO, Replacing Bastianini
(Bloomberg) -- Banca Monte dei Paschi di Siena SpA appointed banking veteran Luigi Lovaglio as chief executive officer after ousting Guido Bastianini from the role.
The board of directors of the the troubled state-owned lender unanimously approved Lovaglio’s appointment as CEO and general manager, “taking into consideration his relevant experience at an international level, combined with a deep knowledge of the Italian banking sector,” according to a statement Monday.
Bastianini, named by a previous government with the support of the populist Five Star Movement, had fallen out of favor with Prime Minister Mario Draghi’s administration over strategy and management, people with knowledge of the matter have said.
The leadership change comes at a challenging time for the historic lender, with the government seeking approval from the European Union for a five-year business overhaul plan after a sale to UniCredit SpA fell through last year. Monte Paschi has been a burden for the government since it was first bailed out in 2009, after being undermined by souring loans and derivatives deals that backfired.
Lovaglio, 66, has decades of experience in Italian finance, having first joined UniCredit in 1973, where he spent most of his career. In 2018, he moved to Credito Valtellinese SpA, known as Creval, where he was named CEO in 2019 after the company’s shareholder structure was revamped amid a 700 million-euro ($800 million) share sale.
Creval’s performance improved during his tenure, with Lovaglio focusing on higher-margin products and curbing risk. Creval’s turnaround led Credit Agricole SA to take over the smaller Italian lender last year in a move that led to Lovaglio’s departure.
Swing to Loss
On Monday, Monte Paschi also reported a fourth-quarter loss of 78.6 million euros as it set aside more money for bad loans. The bank, which had posted a profits in the three previous quarters, booked 222 million euros of loan loss provisions after having written back 132 million euros of loans to performing status in the previous quarter.
The bank said it had no capital shortfall at the end of December and that it could have a capital gap of 150 million euros at the end of 2022. The prediction doesn’t take into account management actions that can be needed to comply with European authorities.
The lender plans to raise 2.5 billion euros to cover capital needs as part of the five-year business plan under discussion with European authorities. The fresh funds will enable the bank to to cover the gap that emerged in stress tests, investments for 800 million euros and restructuring charges of 1 billion euros.
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