Monte dei Paschi di Siena has moved to oust its chief executive Luigi Lovaglio, excluding him from the bank's new board of directors ahead of his term ending next month. The appointments committee's surprise decision follows a unanimous board approval last week of Lovaglio's controversial plan to merge Mediobanca with MPS and delist it from the Milan stock exchange. Lovaglio faces a market manipulation investigation concerning his role in MPS's takeover of Mediobanca last year with financier Francesco Milleri and billionaire Francesco Gaetano Caltagirone, who also holds significant stakes in insurer Generali.

Three other people said top investors disapproved of Lovaglio's Mediobanca strategy, fracturing the board and appointments committee. The FT reported last January that tensions between Caltagirone and Lovaglio over Mediobanca's future and its Generali stake threatened Lovaglio's position. Lovaglio, Caltagirone, and Milleri deny any wrongdoing.

Lovaglio's exclusion now sets the stage for a board vote on Wednesday to approve the new directors, with the outcome likely to reshape MPS's strategic direction.