Republic of San Marino: Selected Issues

IMF Staff Country Reports, December 10, 2024

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Republic of San Marino: Selected Issues

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Bibliographic details

• Published: December 10, 2024
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9798400294761.002

Summary findings

• Compares Sammarinese banks with nearby Italian banks with similar business models, highlighting gaps in asset quality, capital adequacy, and cost efficiency.
• Most San Marino banks need to catch up in terms of asset quality, capital adequacy and cost efficiency.
• The banking sector remains oversized.
• The number of bank branches needs to be reduced by more than two thirds to reach the EU level.
• The share of income-generating assets should be increased.
• It is key to improve the competitiveness of the banking sector well-ahead of the 15-year time frame granted by the EU association agreement.

Detailed diagnostic of the banking sector

• Asset quality: San Marino banks show gaps relative to comparable Italian peers (no specific percentages provided on the page).
• Capital adequacy: Shortfalls vis-à-vis similar Italian banks are identified (no specific ratios provided on the page).
• Cost efficiency: High operating costs reduce profitability; reducing operating costs would boost profits.
• Business model: Increasing the share of income-generating assets is recommended to enhance returns.
• Structure: The sector is oversized; system-level consolidation can be considered if within-bank consolidation is insufficient to restore competitiveness and achieve economies of scale.

Policy recommendations and scenarios

• Bank-level actions:
  • Reduce high operating costs to boost profits.
  • Increase the share of income-generating assets.
  • Pursue within-bank consolidation where feasible to restore competitiveness.
• System-level options:
  • Consider system-wide consolidation to achieve economies of scale if within-bank measures are insufficient.
  • Reduce the number of bank branches by more than two thirds to align with EU branch density.
• Timing:
  • Improve competitiveness well-ahead of the 15-year time frame granted by the EU association agreement.

Content in this bundle

• Republic of San Marino: Selected Issues; IMF Country Report No. 24/331; November 15, 2024
  • Republic of San Marino: Selected Issues; IMF Country Report No. 24/331; November 15, 2024 (Markdown version)
  • Republic of San Marino: Selected Issues; IMF Country Report No. 24/331; November 15, 2024 (PDF)