ROME, Feb 8 ― Italy’s troubled Monte dei Paschi, the world’s oldest bank, on Monday ousted its chief executive and named an immediate replacement to lead negotiations on a recovery plan with Brussels.

Guido Bastianini, who led the ailing state-controlled Siena bank since 2020, would be leaving “with immediate effect”, it said in a statement.

He was replaced by mergers specialist Luigi Lovaglio, 66, picked for his “significant experience, including at an international level”.

The economy ministry wants a fresh face as it negotiates a new recovery plan for the ailing bank with the European Commission.

The state has been the main shareholder of Monte dei Paschi di Siena (BMPS) since its bailout in 2017, and the government is keen to resolve the banking sector’s thorniest dossier as quickly as possible.

Negotiations with Brussels resumed in early December over recapitalisation, cost reductions, and an extension of the 2021 deadline for the state to divest from BMPS.

The bank has fallen behind on a plan agreed with the European Commission in 2017, particularly in terms of job cuts and capital strengthening.

An unimpressed European Central Bank asked it in early February to further strengthen its capital base.

Buyer wanted

BMPS has also yet to attract a buyer.

Rome wants to sell its 64.2 percent share, but a possible deal with Milan-based UniCredit in October fell through.

Negotiations were hampered by the amount of public money requested by Italy’s second biggest bank to take over BMPS.

With no sale in sight, the bank was forced to submit a new plan to Brussels in December, which includes a €2.5 billion (RM11.9 billion) capital increase, to be carried out in 2022.

Bastianini, 63, had been banking on a voluntary redundancy plan saving around €275 million a year.

He had mooted the idea of some 4,000 voluntary departures ― almost a fifth of the workforce, which stood at 21,297 employees at the end of September.

But Brussels thought that too small a saving, sparking the search for a new CEO, according to media reports.

Founded in 1472 in Tuscany, BMPS made a disastrous acquisition in 2007 of Banca Antonveneta at twice its estimated value.

It then plunged further into the red when its executives were accused of fraud and embezzlement.

Hit by the eurozone debt crisis in 2008 and burdened by a mountain of bad loans ― loans that may never be repaid ― the bank has accumulated heavy losses.

After BMPS failed to raise the €5 billion needed by the end of 2016 to recapitalise, the state was forced to step in with a bailout that cost Italian taxpayers €5.4 billion. ― AFP