MILAN (Reuters) -Italy is preparing to cap at 240,000 euros ($254,496) the yearly pay of top executives hired from 2023 in banks rescued by the state, a move that has bearings for the reappointment of Monte dei Paschi’s (MPS) chief executive.
Rome owns 64% of the Tuscan bank after rescuing it in 2017.
A Chamber of Deputies committee passed the measure early on Wednesday as part of last-minute changes to the 2023 budget.
After failing to clinch a sale of Monte dei Paschi to UniCredit last year, the Treasury in February hired veteran banker Luigi Lovaglio to lead the Siena-based lender.
Lovaglio, a well-respected executive who built his career at UniCredit to eventually head the group’s Polish arm, in November pulled off a 2.5 billion euro capital raise in stormy markets.
Lovaglio personally invested 200,000 euros in Monte dei Paschi’s new share issue, which risked failing given investors’ reluctance to put money into a bank tainted by scandals on the backdrop of Ukraine’s war, rampant inflation and an expected recession in Europe.
He runs for reappointment in April when Monte dei Paschi’s current board expires.
As a bailed out bank, Monte dei Paschi already applies curbs to executives’ pay and Lovaglio’s fixed pay amounts to 466,000 euros a year with no variable compensation.
As a comparison the head of another mid-sized Italian bank, Banco BPM, last year earned 2.3 million euros.
Under terms Italy agreed with European Union authorities, MPS executives cannot earn more than 10 times the average employee salary.
($1 = 0.9430 euro)
(Reporting by Valentina Za in Milan and Giuseppe Fonte in Rome; Editing by Louise Heavens and Jonathan Oatis)