2016年-IMF国际货币组织全球_Republic_of_San_Marino_Selected_Issues_30页_675kb

Summary of the Selected Issues Paper on the Republic of San Marino

Core Content

This paper analyzes the challenges San Marino faces in managing and resolving its nonperforming loans (NPLs), which have become a major issue for the country's banking sector since the 2009 financial crisis. It provides an overview of the causes of the NPL accumulation, the current situation, and policy lessons from similar crises in other small countries like Iceland, Ireland, and Cyprus. The paper also evaluates the measures taken by San Marino so far and identifies the main legal and tax impediments to effective NPL resolution.

Main Issues and Challenges

A. Introduction

• San Marino's banking sector is struggling with a high level of NPLs, which has become one of the most pressing challenges.
• As of September 2015, NPLs accounted for 46% of total loans, with 52% of customer loans impaired.
• The NPL burden is significant, equivalent to 140% of GDP, which is one of the highest in Europe.
• The paper aims to propose a strategy for resolving NPLs and highlights the importance of a robust legal and regulatory framework.

B. Causes of San Marino's NPL Problem

• San Marino's banking sector was previously reliant on its status as a tax haven and bank secrecy, attracting substantial nonresident deposits.
• Banks expanded rapidly, especially through cross-border lending to Italy, which increased their total assets to over 600% of GDP by end-2008.
• Weak regulatory oversight and the carry-trade strategy led to poor lending standards and excessive risk-taking.
• The financial crisis caused a massive deposit outflow, triggering a deep and prolonged recession.
• The Delta-CSRM judicial investigation led to the collapse of CRSM and the need for multiple recapitalizations.

C. Current Situation

• Over half of the NPLs are related to nonresidents, with a large portion being linked to Delta Financial Group.
• Secured NPLs account for 36% of total NPLs, with collateral covering about 40% of secured loans.
• Collateral includes guarantees, real estate (24% of which is abroad), and cash deposits.
• NPLs are highly concentrated, with a bank's five largest exposures accounting for about 70% of total NPLs.
• Excluding CRSM, the share of NPLs is still over 40% of the total problem loans.

D. Lessons from Other Small Countries

• Iceland:
  • Split failed banks into domestic and foreign parts, transferring domestic assets to new state-owned banks.
  • This protected domestic depositors and taxpayers, preserved the payment system, and allowed for immediate sector downsizing.
  • The strategy included capital controls and a debt-to-equity swap for creditors of old banks.
• Ireland:
  • Created NAMA, a centralized asset management company, to handle legacy NPLs.
  • NAMA allowed banks to transfer problem loans at a discount, reducing their capital burden.
  • However, challenges included determining the correct transfer price and the upfront crystallization of losses.
  • NAMA also helped stabilize the sector and promote a market for distressed assets.
• Cyprus:
  • Implemented a "bail-in" policy, capitalizing banks through the conversion of uninsured deposits into equity.
  • This was necessary due to limited fiscal space and the need to avoid further public sector losses.
  • The resolution relied on internal workout mechanisms and a sector-wide arrears management framework.

E. Measures Taken by San Marino

• A consolidation process has reduced the number of credit institutions from 12 to 7, with one acting as a "bad bank."
• Financial and fiduciary companies also declined from 48 to 8.
• The government introduced a law (DL, June 27, 2013, n.72) that allows the State to provide a deferred tax asset (DTA) to compensate for the difference between the value of transferred assets and liabilities.
• The DTA can be used over eight years to reduce corporate income tax or other state payments.
• The DTA is subject to changes in the market value of the fund's shares and can be adjusted to offset losses or additional provisions.
• Three closed funds have been established to manage NPLs of weak banks, but the approach has limitations.

F. Main Impediments to NPL Resolution

• DTA Misuse:
  • The inclusion of DTA in regulatory capital overstates banks' financial soundness.
  • DTA loses value when banks experience tax losses, which is precisely when they need capital the most.
  • This creates a potentially fragile buffer.
• Valuation Challenges:
  • There is difficulty in agreeing on common valuation criteria for transferred assets.
  • The joint AMC is expected to consist of separate funds for each bank, limiting economies of scale.
• Legal and Tax Framework:
  • The legal framework does not fully support the resolution of NPLs, and the tax system may hinder the effectiveness of resolution strategies.
  • The DTA mechanism is not optimal and may reduce future profitability.

G. Conclusions

• NPL resolution is a complex and lengthy process that requires a comprehensive strategy.
• San Marino's NPL problem is severe, and the current measures have not been fully effective.
• A more robust legal and tax framework, along with improved coordination and valuation mechanisms, is needed to facilitate NPL resolution.
• Policy recommendations include enhancing the legal framework, improving the transparency and independence of resolution mechanisms, and promoting a more effective market for distressed assets.

Key Information

• NPLs as of September 2015: 46% of total loans, 52% of customer loans impaired.
• Total NPLs: Equivalent to 140% of GDP.
• DTA: Deferred tax asset mechanism used to compensate for asset-liability transfers.
• San Marino's Banking Sector:
  • Number of credit institutions: 7 (down from 12).
  • Number of financial and fiduciary companies: 8 (down from 48).
• Policy Challenges:
  • DTA may lose value when banks need it most.
  • Lack of a clear legal framework and regulatory tools hinders effective NPL resolution.
  • The joint AMC approach is not yet fully operational due to valuation disagreements.