Paschi Reaffirms ‘Full Confidence’ for CEO Amid Mediobanca Probe

(Bloomberg) — Banca Monte dei Paschi di Siena SpA renewed its support for Chief Executive Luigi Lovaglio in the investigation into the bank’s takeover of Mediobanca SpA.

Paschi said in a statement late Friday that the lender’s board “unanimously renewed” its confidence in Lovaglio after an in-depth review.

Lovaglio is being investigated by Milan prosecutors for allegedly coordinating the Mediobanca purchase with billionaire Francesco Gaetano Caltagirone and Delfin Sarl Chairman Francesco Milleri, according to documents previously seen by Bloomberg News. According to the documents, the trio did not disclose their coordination to the market or relevant authorities.

Monte Paschi’s shares closed up 4.6% on the day of the calls and have since extended the decline to nearly 13%.

Monte Paschi completed its 17 billion euro ($19.7 billion) acquisition of Mediobanca in September, in a deal backed by the Italian government under Prime Minister Giorgia Meloni. Two billionaire clans began building their own estates in Monte Paschi about a year ago when the government sold some of its shares.

Lovaglio’s next task will be to implement the merger and achieve the cost-cutting goals outlined in the plan. Paschi also said in his statement that the working groups consisting of employees of both banks “continue to work at full capacity” to create synergy.

Paschi said the acquisition would enable it to add asset management operations and save €300 million in annual costs. The expanded bank will also be able to accelerate the use of €2.9 billion of deferred tax assets to take advantage of capital benefits.

More stories like this available Bloomberg.com