Lovaglio's Triumphant Return: MPS Shareholders Defy Board and Restore Banking Leader

Luigi Lovaglio has returned as chief executive of Monte dei Paschi di Siena (MPS), securing a dramatic comeback at the Siena-based bank exactly three weeks after being removed from his delegations and suspended as director general. The Italy-based lender saw its shares rally 4.67% to €8.61 following the shareholder vote, underscoring market approval for the man who steered MPS through one of Europe's most improbable banking turnarounds.

Why This Matters

• Governance upheaval: A shareholder rebellion overturned the outgoing board's decision, reinstalling the architect of MPS's revival despite ongoing criminal investigations.

• Market confidence: The €28 billion market-cap bank gained investor backing for continuity in executing its ambitious 2030 industrial plan, which targets €3.7 billion in net profit.

• Regional banking stability: The outcome secures leadership for Italy's strategically important Tuscan lender as it integrates the completed €19 billion takeover of Mediobanca, with full integration targeted for end-2026.

• Legal uncertainty remains: Lovaglio is under investigation by Milan prosecutors for alleged market manipulation tied to the Mediobanca acquisition but has not yet been formally charged, with trial implications still unclear.

The Shareholder Rebellion That Changed Everything

At the April 15 assembly in Siena, the PLT Holding slate backed by the Tortora family captured 49.95% of votes cast, decisively beating the outgoing board's list at 38.79% and an independent Assogestioni slate at 6.94%. Under Italian corporate governance rules, these voting percentages determine proportional board representation: the result hands Lovaglio's faction 8 seats on the 15-member board, with the previous administration securing 6 seats and Assogestioni just 1.

The turning point came from Delfin, the holding company of the late Leonardo Del Vecchio's family, which controls 17.5% of MPS. Delfin's decision to back Lovaglio—despite being under investigation alongside him in the same Milan probe—tilted the balance. Other key supporters included BlackRock (5.2%), Banco BPM (3.74%), Norges Bank (2.4%), and even the Fondazione MPS (0.2%), the historic local stakeholder.

As results were announced, small shareholders erupted in chants of "Lovaglio, Lovaglio", followed by sustained applause. The 70-year-old banker, asked whether he felt vindicated, insisted his motivation was not revenge but "implementing an innovative project that creates value for all stakeholders." He told reporters he expects "absolutely easy" collaboration with the new, highly qualified board.

What This Means for Residents and Investors

For Tuscan communities and SMEs that depend on MPS's regional network, Lovaglio's return signals continuity in the bank's refocus on retail, small business lending, and wealth management—the pillars of his turnaround strategy since 2022. The lender employs thousands across Italy, and over 4,000 staff departures negotiated with unions during Lovaglio's tenure helped restore profitability without destabilizing the workforce.

Shareholders and bondholders benefit from the market's confidence: the stock surge adds hundreds of millions to MPS's valuation, and the bank's 16% CET1 capital ratio positions it among Europe's best-capitalized institutions. Dividend payouts resumed in 2023 after a 13-year hiatus, and the 2026-2030 plan promises €16 billion in total distributions to investors, with a 90% payout ratio.

However, legal risk persists. Milan prosecutors have placed Lovaglio in the registro degli indagati (register of investigated persons) for alleged participation in a "hidden concert" with Delfin chairman Francesco Milleri and industrialist Francesco Gaetano Caltagirone to coordinate acquisition activity without proper disclosures to regulators (Consob, ECB, IVASS). The investigation focuses on whether this coordination involved not only Mediobanca but also potential indirect control of Assicurazioni Generali. Charges include market manipulation and obstruction of supervisory authorities. Although under investigation, Lovaglio has not yet been formally charged; if that changes and he is eventually convicted, sanctions could disrupt MPS's leadership again.

The Turnaround Nobody Thought Possible

Lovaglio joined MPS's board in February 2022, handpicked by then-Finance Minister Daniele Franco under the Draghi government. At the time, the Italy Ministry of Economy and Finance still owned the majority of MPS after a failed 2021 sale to UniCredit, whose CEO Andrea Orcel had demanded billions in state guarantees. Brussels was pressing Rome to privatize the chronic problem child of Italian banking, synonymous with scandal and multibillion-euro losses.

The Lucania-born banker, with a four-decade career spanning Credito Italiano, UniCredit, Poland's Bank Pekao, and Credito Valtellinese, set about the unthinkable. His €2.5 billion recapitalization in autumn 2022 succeeded despite widespread skepticism. Criminal and civil court rulings defused legacy legal risks. A multibillion-euro tax credit reserve and the ECB's high-rate environment turbocharged earnings. MPS returned to investment grade from Fitch, Moody's, and S&P.

By 2024, the MEF had sold down its stake via accelerated bookbuilding, and MPS had amassed the capital to launch a hostile takeover of Mediobanca. That nine-month battle was completed in September 2025, positioning MPS as Italy's third-largest banking group with over 7 million clients. The bank's market cap soared more than tenfold during Lovaglio's tenure, peaking at €28 billion.

Why the Board Tried to Block Him

Despite these achievements, MPS's outgoing board refused to renominate Lovaglio for the April renewal. Internal frictions had mounted for months, culminating in a clash over Mediobanca's potential delisting. Directors reportedly preferred more collegial decision-making, chafing at Lovaglio's autonomous, sometimes abrasive management style.

The Milan investigation loomed large. Prosecutors alleged that intercepted phone calls—including one in which Lovaglio mentioned a "perfect thing" and another referencing "35 in hand" for control—evidenced coordination with Delfin and Caltagirone. The board feared reputational and regulatory fallout if Lovaglio's investigation status changed.

On March 4, the nominations committee excluded him from the slate. By March 25, the board revoked his CEO delegations and suspended him as director general for "loss of fiduciary relationship" after he accepted PLT Holding's nomination on a rival slate—a move the board deemed incompatible with his role. Maurizio Bai, deputy director general, stepped in as interim chief.

The Mediobanca Integration and Strategic Stakes

The merged entity is slated to complete integration by end-2026, with an industrial plan targeting €700 million in annual synergies, €4.8 billion in revenues by 2030, and an improved cost-income ratio of 37%. The blueprint preserves Mediobanca's brand for high-end corporate and investment banking, while folding retail and affluent wealth units—including Banca Widiba—into MPS's network.

Crucially, Mediobanca's 13% stake in Assicurazioni Generali remains within the combined group, offering diversification and a strategic capital buffer. Yet the tie-up is subject to ECB, Bank of Italy, and potential golden power approvals, and analysts warn that a market valuation below 1x tangible book could destroy value for Mediobanca shareholders.

What Comes Next

Lovaglio faces the dual challenge of delivering on the 2030 plan while navigating the Milan probe. The investigation, led by chief prosecutor Marcello Viola and deputies Roberto Pellicano, Giovanni Polizzi, and Luca Gaglio, continues to scrutinize the MEF's November 2024 stake sale, which critics say lacked competitive bidding and favored friendly buyers. No trial date has been set, but the inquiry has already roiled markets and complicated MPS's governance.

For now, the Italy market regulator Consob and the ECB have not taken enforcement action. Lovaglio's allies argue that his return, blessed by major institutional investors, demonstrates confidence that the legal risk is manageable. Skeptics counter that a formal indictment could trigger a second leadership crisis within months.

Inside MPS's Siena headquarters, employees and local stakeholders celebrated a leader who restored pride to a once-disgraced institution. Whether Lovaglio can finish what he started—transforming MPS into a sustainable, diversified Italian champion—will depend on courtroom outcomes as much as boardroom decisions.