Monte dei Paschi di Siena has stripped CEO Luigi Lovaglio of his powers after a dramatic boardroom battle over his controversial Mediobanca takeover. The Italian bank's board voted to exclude Lovaglio from its list of CEO candidates and revoked his executive powers with immediate effect, setting up a showdown at the April 15 shareholder meeting.

Lovaglio's 2024 hostile bid for Mediobanca, backed by the Italian government and billionaire Francesco Gaetano Caltagirone, transformed MPS from a bailed-out lender into a banking powerhouse. However, the deal triggered a market-manipulation investigation involving Lovaglio, Caltagirone, and Delfin's CEO. Board insiders say the probe became too great a risk as MPS prepares to merge with Mediobanca.

Lovaglio now faces off against Fabrizio Palermo, Caltagirone's close ally, for control of Italy's third-largest lender. The battle centers on control of Mediobanca's 13% stake in Generali, a major Italian insurer. Palermo, who lacks banking experience, was ranked highest by MPS's selection committee. The turmoil highlights how political and financial interests continue to shape Italy's banking sector, with one London lawyer warning that MPS's strategy remains hostage to opaque alliances rather than stable investor mandates.