Italian Bank Monte Paschi Faces the Future

Nestled in the hills of Tuscany, Banca Monte dei Paschi di Siena, the world’s oldest bank, once hosted shareholders with its own vintage Chianti and mounds of beef brisket. At its last annual general meeting in October, it served sandwiches and mineral water. Chairman Alessandro Profumo told shareholders the lunch symbolized the bank’s new diet.

Profumo and Chief Executive Officer Fabrizio Viola, appointed this year, are slashing costs to reverse a decade of missteps that brought the 540-year-old lender to its knees. They’re cutting 4,600 of 31,170 staffers by 2015 and closing 400 branches. Monte Paschi has sold assets including its north Italian unit, Biverbanca, and is in talks to sell its leasing business. The bank is also seeking €3.9 billion ($5.1 billion) in government loans, its second bailout in three years. Says Viola: “We have to clean things up and turn the bank into an engine of renewal.”