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UPDATE 1-ISS urges Creval investors to vote against keeping current CEO

(Adds Creval statement in paragraph 4)

MILAN, April 8 (Reuters) - Shareholder advisory firm Institutional Shareholder Service (ISS) on Thursday recommended that investors in Italian bank Creval reject a slate of board nominees that include current Chief Executive Luigi Lovaglio at this month’s general meeting.

Investors in third-tier lender Creval meet on April 19 to pick a new board, two days before the end of a buyout offer launched by the Italian arm of Credit Agricole.

Credit Agricole Italia (CAI) had asked Creval to postpone the decision on the board renewal pending the outcome of the bid.

But in a statement on Thursday Creval said it had published CAI’s request on its website, a move that paves the way for the issue to be voted on at the shareholder meeting.

ISS said it would amend its report were the agenda for the general meeting to be revised.

In the meantime, it recommended Creval shareholders, who can support only one slate of board nominees, back candidates submitted by institutional investors, rejecting instead the slate filed by shareholder DGFD.

DGFD, a vehicle owned by French businessman Denis Dumont, controls around 6% of Creval following a 2018 new share issue that reshaped the bank’s shareholder base.

Dumont pushed for a management overhaul at Creval that led to the appointment of Lovaglio, a former UniCredit executive, with a mandate to steer the bank towards a merger.

Creval has rejected CAI’s takeover offer as too low, though it says it has a sound strategic rationale.

In suggesting a vote against the slate including Lovaglio and current Chairman Alessandro Trotter, ISS said the slate presented by institutional investors was “better positioned to represent the long-term interests of minority shareholders and carry out an independent oversight of the management’s action”.

CAI’s bid started on March 30 but with the stock trading well above the bid’s price only 0.004% of the company’s capital has been tendered so far. (Reporting by Andrea Mandala, writing by Valentina Za; editing by David Evans and Susan Fenton)

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