Monte Paschi’s Executive Coup Only Hurts Its Backers

Banca Monte dei Paschi di Siena SpA is Italy’s oldest bank and its longest-serving source of corporate embarrassment. A sudden, unexpected proxy fight over who should run the lender is the latest sign that the board is dancing mainly to the tune of a single shareholder — construction industry billionaire Francesco Gaetano Caltagirone.

The simple story is Monte Paschi’s board has made a shock bid to switch jockeys mid-race. In December, it gave its full support to Chief Executive Officer Luigi Lovaglio; three months later, it proposed a surprise new team of directors that excluded him. While the reasons remain publicly obscure, the board’s chosen replacement has no banking experience, but is close to Caltagirone. The roots of this fight run deep, however.