Monte dei Paschi di Siena: the world’s oldest bank at the heart of Italy’s financial power struggle

She is a very, very old lady. But fate has decreed that, just as she passes the venerable age of 500, she should find herself caught up in enough adventures, misfortunes and dramatic twists to fill an entire lifetime. Monte dei Paschi di Siena, the world's oldest bank, has gone from the brink of collapse to a state bailout in the space of just a few years, from prey to predator, only to find itself once again in the uncomfortable position of being hunted. Above all, it is now at the centre of the biggest battle for control of Italian finance. A decisive moment The bank now appears destined to fall into the hands of Intesa Sanpaolo, Italy's largest bank. The roughly €35bn offer launched in June by the group led by Carlo Messina looks increasingly difficult to resist. Meanwhile, an attempt by MPS chief executive Luigi Lovaglio to escape Intesa's embrace by acquiring two other banks has lost the backing of its main shareholders, including construction magnate and financier Francesco Gaetano Caltagirone and Delfin, the holding company of the turbulent Del Vecchio dynasty behind eyewear giant EssilorLuxottica. One crucial hurdle remains: the shareholders' meeting on 29 October, which is expected to settle the matter once and for all. But the story already seems to be heading towards yet another reversal of fortune. The bank that took over Mediobanca barely a year ago now looks set to be taken over itself. Monte dei Paschi: Five centuries of history To understand how it came to this, we need to go back more than five centuries. In 1472, the Republic of Siena established a Monte di Pietà, a charitable lending institution that provided small loans to the city's poorest residents. Something of those origins has stayed with Monte dei Paschi ever since: an exceptionally close bond with Siena and its centers of power. Siena, after all, is no ordinary place. Its 17 contrade, or historic districts, fight fiercely for victory in the Palio horse race, yet close ranks with remarkable determination whenever the city's interests need defending against outsiders. For centuries, Monte dei Paschi was foremost among those interests. It funded universities and social programmes, provided jobs and distributed wealth. To the people of Siena, it was more than a bank: it was Babbo Monte, or "Papa Monte". And as so often happens when banking interests become entangled with political calculations, things can go badly wrong. A left-wing stronghold That has been particularly true in recent decades. Siena has long been a stronghold of the left, first of the Communist and Socialist parties and later of the Democratic Party. Through the Monte dei Paschi Foundation, which retained control of the bank even after its stock market flotation in 1999, local politicians continued to wield considerable influence over management decisions. It was against this backdrop that the deal which changed everything took shape in 2007: the acquisition of Antonveneta. Under chairman Giuseppe Mussari, a product of Siena's political establishment, Monte dei Paschi was determined to shed its provincial status and compete with the big players. It paid Spain's Santander around €9bn for Banca Antonveneta, which the Spanish group had acquired only shortly before, during the break-up of the Dutch bank ABN Amro, for a much lower price. It was November 2007, and the collapse of Lehman Brothers was approaching. Monte dei Paschi entered the global financial crisis with its finances already in a fragile state. What followed was a succession of capital increases, non-performing loans, the sovereign debt crisis and a derivatives scandal involving Deutsche Bank and Nomura, which triggered years of investigations and court proceedings. The foundation, which had borrowed heavily in an effort to retain control, lost almost all its assets. The bank that had financed Siena for centuries was now in danger of going under. The state bailout The rescue came in 2017. The Italian state injected €8.2bn into the ailing bank, taking a stake of around 70%. A prolonged restructuring followed, with thousands of job cuts and branches closures. The recovery only began to take shape in 2022, with the arrival of Luigi Lovaglio as chief executive. No longer a young banker, Lovaglio nevertheless brought fresh drive to the institution. A capital increase, cost-cutting, rising interest rates and the return of dividends helped turn the business around. In 2024, Monte dei Paschi posted almost €2bn in profits. Meloni's move Then the story took an unexpected turn. Giorgia Meloni's government, keen to return MPS to private ownership, began selling its shares — but not to just anyone. In November 2024, the Treasury sold a 15% stake to a select group of investors: Banco BPM, Anima, Caltagirone and the holding company owned by the heirs of Leonardo Del Vecchio. Economy Minister Giancarlo Giorgetti defended the decision. The identities of the buyers, however, tell much of the story. Caltagirone and Delfin were already shareholders in Mediobanca and Generali, Italy's largest insurance group. For years, they had challenged the balance of power surrounding the two institutions, seeking to gain control of them. Founded in 1946 by Enrico Cuccia, Mediobanca had exercised decisive influence over Italian capitalism for decades through a web of cross-shareholdings and relationships with the country's great industrial families. Its crown jewel was its stake of around 13% in Generali, which, while not conferring formal control, effectively gave it control over the insurer. And so Monte dei Paschi, rescued with taxpayers' money, became the instrument of a remarkable reversal in the balance of power. In January 2025, Lovaglio, acting in full agreement with his new major shareholders — effectively handpicked by the Meloni government — dared to attempt the seemingly impossible: he launched a takeover bid for Mediobanca from Siena. The Milan public prosecutor's office has opened an investigation into the circumstances surrounding the government's sale of the MPS shares. The bid was greeted with widespread scepticism. But eight months later, Lovaglio had won. Monte dei Paschi now controlled the Milanese investment bank and, through Mediobanca, its stake in Generali. Caltagirone and Delfin, already direct shareholders in the insurer, emerged with even greater influence. An irresistible prize for Intesa Sanpaolo But that victory already contained the seeds of the next battle. By acquiring Mediobanca, MPS gained the largest single shareholding in Generali, at 13.35%. Generali operates in more than 50 countries, serves around 75 million customers and had €944bn in assets under management in mid-2026. For Intesa Sanpaolo, it was an irresistible prize. That is the logic behind Messina's takeover bid for MPS. Acquiring Monte dei Paschi would not give Intesa control of Generali, whose shareholders also include Caltagirone, Delfin and UniCredit. But by combining Mediobanca's holding with the 3.13% it already owns, Intesa would become Generali's largest shareholder, with considerable influence over the insurer. Lovaglio's counterstrategy was to expand MPS further, by acquiring Banco BPM and Banca Generali — a plan that would almost double the group's size. But Crédit Agricole, Banco BPM's largest shareholder, opposed the move, while Caltagirone and Delfin distanced themselves from the plan. Intesa then raised the stakes, making its offer conditional on Monte dei Paschi shareholders rejecting Lovaglio's proposal. The shareholders will make their decision official on 29 October, but an Intesa victory is no longer in doubt. Checkmate for financial nationalism After more than five centuries of history, Monte dei Paschi looks set to retain its name but lose its independence. The Meloni government had hoped to use Caltagirone and Delfin to create a "third force" in Italian banking, giving financial substance to its nationalist ambitions. Instead, it is effectively being forced to bow to the rules of the market — where, ultimately, those with the deepest pockets prevail. There is one final political irony. For years, the Italian right held up Monte dei Paschi as a symbol of the damage caused by the cosy relationship between left-wing politics and banking. Now, after a right-wing government helped bring major private investors back into the bank's ownership, Intesa's plan envisages transferring a large proportion of the bank's branches in Siena to Unipol and then to its subsidiary BPER. And Unipol is controlled by the cooperative movement, heir to the so-called red cooperatives historically associated with the Italian left. If this was supposed to be a triumph for the government's brand of financial nationalism, things have certainly not gone according to plan. This article was reviewed by an external translation partner