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Andorra’s banking sector: Facts & Figures

Updated September 2019 – For earlier editions of Facts & Figures click here

The Principality of Andorra is a European micro-State located in the Central Pyrenees between Spain and France with a population of around 80,000, receiviing 8 million tourists each year.

The Andorran economy is focussed on services, being an important touristic centre for shopping and for winter sports activities.

The economic slowdown in our neighbouring countries has not affected the development of the Andorran economy which has grown close to 2% with good progress in the different domestic productive sectors. The economic activity has shown consistency, with a prominent touristic and construction sector, and with the dynamism of the service sector.

The financial sector is a cornerstone of Andorra’s economy due to its significant contribution to the country’s GDP (together with the insurance sector, the financial sector accounts for approximately 21%, while employing 5% of the workforce), with its banking system at the core.

The financial system comprises five banking groups, one specialised credit institution, eight financial investment firms, four asset management firms and 34 insurance companies, 18 of which are branches of foreign insurance companies authorised to do business in the Principality.

The banking sector has over 85 years’ experience in the business with a presence in 14 countries. It comprises five banks which together manage over €44 billion. Out of the five banks, three are Andorran-owned, one is a subsidiary of a Spanish bank and the other is owned by an American fund.

The banks offer a full range of banking services including loans and credit, asset management and financial consultancy, operations with liabilities, financial analysis and other services (credit cards, transfers, etc.). They have also specialised subsidiaries for financing, insurance and asset management firms.

One of the challenges for the Andorran banks is to continue improving client services, both through face-to-face and remote channels. In this context, one of the sector’s main challenges has been the digital transformation. Furthermore, Andorra and the banking sector have become SEPA participants.

Andorra’s banking sector overcame a number of challenges in 2018. The country’s financial institutions are facing the final part of their transformation with a firm commitment to transparency and compliance with international regulations and standards. The Andorran banking sector ended 2018 by consolidating its position with a total of €44.9 billion of managed resources, a figure that has remained stable over the past three years, but which has almost doubled in the last decade.

After several years of changes in the international financial scene, Andorra remains a strong financial centre. In 2018, all Andorran banks maintained their international credit ratings, which shows the agencies’ renewed confidence in the industry as Andorran banks continue to enjoy solid fundamentals. One other important factor that points to the sustainability and reliability of the Andorran banking sector is its financial return (ROE), which stood at 7.31%.

The figures for last year also show a profitable and solvent sector. The Core Equity Tier 1 (phase-in) solvency ratio —calculated on a comparative basis— was 16.30% on 31 December 2018. We are an internationally active financial marketplace. The banking sector is a major player in the Andorran economy and is committed to improving the country’s economic growth and well-being.

Contributor: Natàlia Marimón Allan n.marimon@andorranbanking.ad