Banca Monte dei Paschi di Siena SpA’s board will convene on Monday to evaluate whether CEO Luigi Lovaglio can retain his position after agreeing to seek another term under a rival proposal by a minority shareholder, sources confirm. The Italian lender, Italy’s third-largest bank by assets, faces internal discord as the proposal challenges existing governance structures. Analysts suggest the outcome could reshape leadership dynamics amid ongoing efforts to stabilize the institution’s financial footing.

Lovaglio, who has led Paschi since 2021, previously navigated the bank through a restructuring plan that reduced its non-performing loans by €10 billion. The minority shareholder’s push for his continued tenure highlights tensions between institutional investors and activist groups seeking reforms. While Paschi’s board has not disclosed details of the proposal, the mere consideration of a contested reappointment underscores fragility in shareholder relations and potential delays in strategic initiatives.

Market watchers warn that prolonged uncertainty over executive leadership could spook investors, particularly as Paschi prepares to finalize a €500 million capital raise to bolster liquidity. The bank’s share price, which has declined 12% year-to-date, may face further pressure if the board meeting fails to resolve the dispute. Industry experts emphasize that swift resolution is critical to maintaining confidence in Paschi’s turnaround efforts.

This development reflects broader challenges in Italy’s banking sector, where legacy institutions grapple with balancing shareholder demands and regulatory expectations. A definitive decision on Lovaglio’s role by the end of the month could signal either cohesion or continued upheaval, with ripple effects across Europe’s mid-tier banks.