"At a meeting today the board of BMPS and CEO Fabrizio Viola agreed to change the head of the bank," BMPS said in a statement which added that Viola would stay in his post and oversee the transition pending the arrival of a successor.
"Fabrizio Viola, called upon to head the bank at a moment of extreme difficulty for the establishment, leaves it solid and in the black with a plan unveiled last year, on July 29th, comprising a definitive structural solution for bad debts," the bank said.
The plan drawn up by Banca Monte dei Paschi di Siena's (BMPS) board of directors included the offloading of 9.2 billion euros ($10.3 billion) of non-performing assets which had threatened to overwhelm the world's oldest lender, founded in 1472, as well as a capital increase of five billion euros.
The drastic restructuring of Italy's third-biggest bank was required to avoid triggering a banking crisis which it was feared could spread beyond Italy's borders.
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BMPS came last in EU bank stress test results released in July sparking fears it would suffer a 14.23 percent plunge in its core capital ratio - a measure of stability - by 2018.
The tests showed it as the only one of 51 banks examined to end up with a negative measure. The stress tests pinpointed BMPS as the financial institution most susceptible to bankruptcy.
The board said it expected to unveil a successor to Viola soon and thanked him for his dedication over four years in charge. Since the 2008 financial crisis regulators have tightened oversight of banks to head off a potential systemic threat to the global financial system.