Financial System | The Banking and financial system |
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The
operators The financial
system is made up of 12 banks and 49 finance and trust companies. Law No. 165 of 17 November 2005 (LAW ON COMPANIES AND
BANKING, FINANCIAL AND INSURANCE SERVICES referred to as “LISF”) redefined all reserved activities, that is activities for
which the prior authorisation of the Central Bank is necessary; moreover it
reorganised the rules regulating ancillary and essential services offered by
intermediaries which until such law was passed were not regulated, such as
management companies offering collective
investment services and insurance and reinsurance companies. The
list of authorised persons is available on the relative Register. Besides reserved activities
in terms of Law No. 165/2005, banks, financial companies and trust companies
may also act as trustees in terms of Law No 37 of 17 March 2005, subject to the
prior approval of the Central Bank. . At the moment 4
banks and 11 financial companies and trust companies are authorised to act as
trustees. The names of such intermediaries can be found in the relative List. Size (data as at 31 December 2005) The number of
persons employed in the banking sector went up by 53 persons reaching 517,
equal to 76% of staff in the financial system and 2.8% of the total workforce
of the Republic of San Marino. During financial year 2005 5 new branches were
authorised bringing the total number of branches to 52 that is one branch for
every 577 residents. . Finally, the end
of year result of the banking system increased by 568.6 million Euros, a 7.9% increase over 2004. Collective
Investment Services By means of
Central Bank Regulation No. 2006-03 mutual investments funds were added to
the range of financial products
available in the Republic of San Marino, these are very popular instruments
widely used in international markets, until now inexistent in the San Marino
legal system. The Regulation
provides that “management companies” shall be the institute around which the
entire process of incorporation and management of San Marino mutual investment
funds shall revolve. In order for them
to be authorised by the Central Bank, management companies must have a minimum
share capital of 200,000 Euro, must be incorporated as joint stock companies
and must possess all the requisites prescribed by European Union directives
such as; good standing of the shareholders, professionalism and independence of
the company representatives; proper equity and administration consonant with
the assets managed and the overall management strategy adopted. The types of open
or closed mutual funds which a management company may set up can be sub-divided mainly according to the type of
clients to which they are destined. In relation to general non specific funds
then the limits of prudence established by the Central Bank must be respected. In the case of
mutual funds reserved to professional clients – in terms of criteria established
in terms of European Union directors on the subject – the fund manager may independently
define the product characteristics. There is also the
possibility to set up “alternative funds” which offer the possibility of
creating investment strategies different to the traditional ones by allowing
the possibility of selling unguaranteed
financial instruments. For all type of
funds, the management company must appoint a depository bank, which need not be a bank in the
Republic of San Marino as long as it set up in one of the European Union or
OCSE states, in charge of keeping the fund assets – which make up a separate estate
from both that of the management company as well as the other funds managed by
it- and to make sure that the investments chosen respect the limits established by the provisions in force and
fund management regulations. The management company must also appoint either the depository bank or to a
third party in possession of specific professional requisites to evaluate equity and to calculate the value
of the mutual funds . These rules aim
at creating an adequate system to encourage professionalism and competitiveness
of managers, which attracts large institutional investments and at the same
time ensures protection of small investors who may develop their knowledge of
more complex financial instruments by means of
initial access limited to products with standard features. To complete the
legal framework regulating collective investment services the Grand General
Council approved Law No, 4 of 15 January 20007 covering tax regulation. Insurance
and Reinsurance activities Regulation of
insurance activities involves two distinct areas; on the one hand laws
regulating insurance intermediaries and on the other those regulating insurance
companies. In relation to
insurance and reinsurance intermediaries (on the distribution phase of
insurance products) the Central Bank issued regulation 2007-02 which sets up
the Registry of persons allowed to exercise such activity in the Republic of
San Marino Insurance and reinsurance intermediation consists of presenting or
proposing insurance and reinsurance policies or of providing assistance and
consultancy directed towards that activity and, if it forms part of the
intermediation assignment, concluding policies or working on the management or
implementation of the policies taken out, in particular in the event of claims.
(article 26 LISF) The Regulation
provides that in order to be included in the register companies must be of good
standing and professionalism, it provides for the organisational rules and the
conduct expected from intermediaries, the suspension hypothesis or cancellation
of the registry, cases of exclusion of the obligation to be entered in the
registry In relation to
regulation on insurance companies the
Central Bank is drafting the regulation text which allows the incorporation of
insurance companies under San Marino Law; the first phase shall only regulate
life insurance. It is planned to shortly initiate consultation to enact the Regulation
during 2007. Trusts Together with the
above referred to Law No. 37/2005, San Marino instituted trusts by enacting
other laws and decrees.. One of the most
detailed parts of the regulations, provides that the role of trustee may be carried out only
by banks, trust corporations, financial corporations, investment companies and
management companies if they are incorporated and registered in the Republic of
San Marino. The exercise of
the Office of trustee is subject to authorisation of the Central Bank, which in
exercising its functions also carries out supervisory functions on the latter.
In this role the Supervisory Authority set up the Register of Authorised Trustees to publish the names of authorised persons. .
Moreover from a
transparency and publicity point of view, Law . 37/2005 provides for setting up the Trust Registry of
the Republic of San Marino whose operative aspects including location,
consultation and certification are regulated by Decree No. 86 of 10 June 2005.
The Register is kept in the Ufficio Industria, Commercio e Artigianato (Chamber
of Industry, Commerce and Craft) under the supervision of the Judge appointed
by the Executive Magistrate. The Trust Register is open to the public. On the one hand the
body of laws on trusts provides for a wide range and number of guarantees
(exercise of the office of trustee only with prior authorisation, supervision
of the activities of the trustee, publication of information on trusts and
trustees, the obligation to keep written records on pain of nullity) without on
the other hand prejudicing the efficacy of the instrument
itself leaving the user autonomous with regard to the possibility of setting up
a trust, all in the ambit of clear and well defined juridical system Further
information. Further information
can be found in the following documents: |
