ROME/MILAN, Feb 13 (Reuters) – Italy’s Monte dei Paschi di Siena (MPS) (BMPS.MI) will not be constrained by an Italian authorities wage cap when Rome decides on a brand new chief govt later this yr, sources mentioned, regardless of reviews that govt pay controls will scale back the enchantment of the put up.
Banker Luigi Lovaglio is operating for a second time period on the helm of MPS and Italian media have speculated the cap would seal his reappointment, by discouraging different bankers to return ahead for the job.
Nonetheless, two sources briefed on the matter instructed Reuters that the cap didn’t apply to MPS, primarily based on the Treasury’s interpretation of the rule.
In its 2023 price range, the right-wing administration led by Prime Minister Giorgia Meloni launched a 240,000 euro ($257,232) ceiling on the annual pay of prime executives named in 2023 at banks rescued by the state. MPS is 64% owned by the state following a 2017 bailout.
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The wage cap compares with Lovaglio’s present pay of 466,000 euros a yr with no variable compensation, which is already nicely beneath friends. By comparability, Giuseppe Castagna, head of mid-sized financial institution Banco BPM (BAMI.MI), for instance in 2021 earned 2.3 million euros.
With MPS’s bailout pre-dating the 2023 price range, the Treasury believes it shouldn’t apply retroactively, the sources mentioned on situation of anonymity given the sensitivity of the matter.
MPS declined to remark.
The MPS rescue deal Italy agreed in 2017 with European Union authorities value taxpayers 5.4 billion euros. Lovaglio, 67, took over at MPS a yr in the past, employed by the Treasury which has since seen key adjustments on the helm.
In November he labored with Rome to drag off a make-or-break 2.5 billion euro new share concern that noticed Italy pump one other 1.6 billion euros into MPS. The financial institution’s shares have gained some 20% since then.
The federal government will resolve Lovaglio’s destiny in April, when a number of different senior roles at state-owned firms additionally come up for grabs.
The highest job at MPS traditionally carries vital dangers. The financial institution’s troubled historical past has seen a couple of prime govt find yourself below investigation by Italian prosecutors.
MPS already enforces EU-mandated caps to its prime executives’ pay, which can not whole greater than 10 instances the typical worker wage.
The Treasury is anticipated to search for a purchaser for MPS after it names a brand new board in April, permitting it to chop its holding as agreed with Brussels.
($1 = 0.9356 euros)
Reporting by Giuseppe Fonte in Rome and Valentina Za in Milan; Enhancing by Gavin Jones and David Holmes
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