ISS urges Creval investors to vote against keeping current CEO

MILAN, April 8 (Reuters) - Leading shareholder advisory firm Institutional Shareholder Service (ISS) advised investors in Italy’s Creval to reject a slate of board nominees that includes current Chief Executive Luigi Lovaglio at this month’s general meeting.

Investors in third-tier Italian 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) has asked Creval to postpone the decision on the board renewal pending the outcome of the bid, but Creval is yet to decide whether to have shareholders vote on CAI’s proposal.

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 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)