San Marino has already reduced its banks from twelve to four, almost always through failure. Perhaps the time has come to do it by choice.
I recently had the chance to speak with an executive who, in the past, held a top position at one of San Marino’s main banks still in operation today.
Quite candidly, I asked him for his professional opinion on something I’ve been mulling over for years: that San Marino should carry out an operation to unify its banks.
Privately, he confirmed that this could well be a viable path: “One large state-controlled banking group and one private bank would be enough for San Marino.”
Our conversation didn’t go much further than that. But speaking personally, even though I don’t claim to have the best expertise on the subject, I’d like to add a few more considerations.
Everyone already knows it
By now, it’s common knowledge that San Marino has a problem with its banks. Crises, bailouts, state-funded recapitalisations, a system-wide securitisation to offload non-performing loans: we’ve seen plenty of all this over the past fifteen years.
On 19 October, San Marino signed the Association Agreement with the European Union. Some say it will give our banks the chance to operate beyond our borders, solving much of the problem.
Others aren’t so convinced. And they have their reasons: access to the single market for financial services won’t be automatic. It will proceed sector by sector, following checks on rules, supervision and the soundness of the system, through a process that could take up to fifteen years (Insider).
There’s also a detail that gets less attention. Doors, once opened, usually swing both ways. If Sammarinese banks will be able to look toward Europe, it’s reasonable to expect that sooner or later European banks will look toward San Marino.
Even a mid-sized Italian bank manages assets that are a multiple of San Marino’s entire banking system, which stood at €4.4 billion at the end of 2025 (BCSM).
That said, a small market already amply served, like San Marino’s, might not prove attractive enough for an Italian bank. Which brings us to our next point.
A business issue before a banking one
Personally, I can only offer a business perspective. But it’s one that applies to banks just as it does to any other kind of enterprise.
In a territory and market as small as San Marino’s, there are simply too many banks. Perhaps leftovers of an all-too-rosy past, when deposits flowed in almost effortlessly, mostly from across the border. In 2008 deposits were worth €14.5 billion, with over 60% held by non-residents; today they amount to roughly half that, €7.3 billion, with non-residents accounting for under 10% (Insider).
That world no longer exists. The market has halved, while the structures serving it have shrunk far less.
When a sector finds itself in this situation, the industry usually consolidates. In jargon, it’s called M&A, mergers and acquisitions: mergers, when two companies become one, and acquisitions, when one buys the other. It happens in telecommunications, in supermarkets, in airlines. And it certainly happens in banking.
The logic is simple. A bank carries extremely high fixed costs that don’t depend on how many customers it serves: a board of directors, a board of auditors, general management, compliance, anti-money-laundering functions, risk management, internal audit, IT systems, regulatory reporting. In San Marino, all of this exists in quadruplicate, for a country with just over thirty thousand inhabitants.
By combining two or more banks, those costs are paid only once: these are the so-called economies of scale. On top of that, capital is pooled, and a larger bank can finance bigger projects, absorb losses more effectively, and present itself with greater credibility to investors, rating agencies and, as of now, Brussels.
And as alignment with European rules progresses, those fixed costs are bound to rise further. Every new regulation will need to be applied, documented and checked four times over.
Consolidation has already happened. In the worst possible way
Truth be told, San Marino has already undergone a round of consolidation. There used to be twelve banks; today there are four: Cassa di Risparmio, Banca di San Marino, Banca Agricola Commerciale and Banca Sammarinese di Investimento (Milano Finanza).
The problem is how we got here.
Not through planned mergers, but through crises, liquidations and bailouts. Asset Banca ended up in compulsory liquidation, with its assets and liabilities transferred to Cassa di Risparmio (2017 decree). Banca CIS, later renamed Banca Nazionale Sammarinese, exited the banking system altogether and was turned into an asset management company (BCSM), leaving more than one saver burned in the process.
Meanwhile, its former top management ended up on trial over the bank’s handling, with convictions for the former director and former deputy director (Corriere Romagna). And just in recent days, in the separate trial for criminal conspiracy, eight more first-instance convictions have been handed down (Insider).
This is consolidation, Titan-style: wait for someone to sink, then pick up the pieces. Often with taxpayers’ money. Cassa di Risparmio, for instance, was recapitalised by the state through an irredeemable sovereign bond to cover losses accumulated during the crisis (Segreteria Finanze).
So the question isn’t whether San Marino will end up with fewer banks. It’s whether it will get there by choice, or by accident.
The 2026 figures: better, but not good enough
In fairness, one clarification is needed. Anyone who thinks Sammarinese banks are still teetering on the edge is looking at outdated figures.
Non-performing loans accounted for 61.3% of the total in 2019; today the figure stands at 14.7% (Insider). By June 2026, gross non-performing loans had fallen to €162 million, while deposits had climbed to €7.275 billion, over a billion more than two years earlier (Tribuna Politica). Good news, then.
Yet the net equity of the entire banking system amounts to just €361 million (Tribuna Politica) — for all four banks combined. And the International Monetary Fund, in June, stated plainly that significant legacy vulnerabilities remain, with limited capitalisation and weak profitability at some banks, and that greater cost efficiency is needed (Libertas).
In other words: the patient has left intensive care, but isn’t ready for the marathon. And the European marathon has only just begun.
A Sammarinese banking system
If we add to all this the fact that Sammarinese banks are not yet entirely out of danger, the idea of creating a unified Sammarinese Banking System (SBS) strikes me as a viable path. Perhaps even an almost obvious one.
The idea, as my interlocutor put it, is simple: one large, publicly controlled hub, alongside a private bank. The former guarantees stability, basic services and credit to households and businesses. The latter keeps competition alive and prevents the system from becoming a state monopoly.
This isn’t science fiction. The state already controls Cassa di Risparmio. Banca di San Marino is roughly 90% controlled by the Fondazione Ente Cassa di Faetano (Milano Finanza), which is currently negotiating the sale of its majority stake to a new partner (San Marino RTV). At least some of the pieces are already on the board.
And I’m not the only one thinking along these lines. In September, the PSD wrote that it should not be taboo to consider tools through which public and private resources could work together, in line with European rules, toward consolidation (Tribuna Politica). Because the market, left to its own devices, doesn’t always produce the best solution for a system as small as ours.
There’s also a very practical argument. With Europe, banks will have to overhaul their IT systems regardless: might as well do it once, not four times over.
Possible obstacles
The first obstacle is human nature. I suspect some people, as always, would rather let the boat sink than hand the oars to someone else. Even Caesar, who once passed through these parts, put it well: better to be first in a village than second in Rome. Every merger means fewer chairs, and in a small country, chairs are few and fiercely defended.
Then come the technical obstacles. Merging fragile balance sheets doesn’t produce a solid bank — the assets need cleaning up first. The state, the foundation and private shareholders will all need to agree on a price. And then there’s staff: in a country of thirty thousand people, every redundancy has a first and last name attached to it.
Finally, a public banking hub needs to be kept at arm’s length from politics. Even the PSD admits that in the past the relationship between politics and banks was far too close (Tribuna Politica). Independent governance and transparent appointments aren’t a minor detail: they are the condition for making this work.
Choosing or enduring
I’m not a banker, and I don’t claim to have the answer in my pocket. But as a consultant, I see a market that has shrunk, structures that have barely changed, and a Europe about to raise the bar.
San Marino has already lost eight banks, almost always in the most costly way possible. Today it has something it didn’t have before: slightly healthier accounts, a signed European agreement, and a few years ahead to act. Now might well be the moment to choose, rather than simply endure.
And if such an operation were ever to go through, there’s another question worth having the courage to ask: with just two banks left, would a Central Bank as it currently stands still be necessary?
Scrapping it altogether (perhaps) wouldn’t be possible, since Europe will only open its doors once it has verified the soundness of our supervisory framework (Insider). But a structure designed for a system of twelve banks could certainly become leaner — or at the very least, smaller and more cost-effective.
It remains to be seen whether anyone is willing to hand over the oars.
Nicholas Perpiglia
