The banking sector of Andorra is one of the most important sectors of the principality. Part of this means that it is highly regulated and it will be relatively easy for a new resident of Andorra to find a bank.
Banking in Andorra is currently controlled by four banking groups:
- Andbank,
- Bank of Sabadell Andorra,
- Credit Andorra and
- Mora Bank.
Andorran banks focus on serving the local clientele through retail banking accounts and private banking services for residents and commercial banking services for local businesses.
If you want to apply for a residence permit in Andorra, you must have a local bank account. This means that it is best to open a bank account with an Andorran bank before starting the process.
It will also come in handy when paying all the costs of moving to Andorra and settling your life here.
What do you need to start banking in Andorra?
The requirements for opening an account here are quite similar to those in the rest of the world. To open a bank account in Andorra, you may need to show:
- A valid passport or other government-issued national ID.
- Proof of current address (such as a utility bill or bank statement if your ID does not show your current address).
- Letter of recommendation from your current bank.
- Proof of economic activity, both for self-employed and full-time workers.
- Proof of origin of assets.
Original documents are welcome. Without them, any copies may have to be notarized in order for the Andorran bank to accept them.
Offshore banking in Andorra
Transparency requirements, which have been included in agreements signed in past years, mean that “offshore banking” in the traditional sense of banking secrecy is becoming an increasingly shrinking part of Andorran banking services.
This transition is especially clear from the recent history of Vall Banc, which has now been acquired by Credit Andorra. It was recently known as Banca Privada d’Andorra, and in 2015 it was seized by the Andorran government after the US Treasury Department listed it as a source of money laundering.
The name was changed and it was bought by investment firm JC Flowers.
However, residential private banking remains an important part of the industry.
How reliable are Andorran banks?
Typically, there are three factors that go into deciding how safe your deposits are at a particular bank. They are:
Solvency: This is a complex calculation that (roughly) boils down to asking what percentage of a bank’s total deposits is held in liquid assets such as cash. If everyone tried to withdraw their money from the bank, what percentage of customers would be satisfied?
Regulation: What due diligence should a bank perform on its customers? What information needs to be reported? Are deposits insured by a government agency?
Access to capital: whether the bank can use central bank funds (or other capital raising instruments) to meet its emergency needs.
Andorran banks are considered to be in above average condition in terms of solvency. They maintain above-average liquidity ratios and exceed the capital requirements set by the Andorran government.
Closer ties resulting from the currency agreement Andorra signed with the EU in the early 2010s mean that banking in Andorra is very similar from a regulatory perspective to banking elsewhere in Europe.
Some of them are quite complex, but what is important for individual investors is that the centrally managed fund insures deposits up to €100,000.
Andorran banks do not have access to the European Central Bank. This can be viewed both negatively and positively.
On the one hand, they don’t have the support to help deal with major system-wide shocks (such as the 2007-08 global financial crisis), but that also means they’ll have to actively prepare for those rainy days with more conservative management.
Credit rating agencies have rated Andorra positively over the past few years.
How to access the Andorran banking system
At least one of the Andorran banks has a branch or automated teller machine (ATM) in every district.
For the most part, bank branches in Andorra are open on weekdays from 9:00 to 17:00. But there are many exceptions, so it’s best to check online first. For example, some establishments will be closed from 13:00 to 15:00 on weekdays.
Currency exchange in Andorra
Since 2002, the euro has been the official banking currency of Andorra. An agreement signed in 2014 with the European Union means that Andorra can issue euro coins (of various denominations) with Andorran motifs.
Since all of its immediate neighbors also use the euro, it is not common to find businesses in Andorra that accept other currencies. For this reason, it is best to exchange your currency for a few euros before moving here.
Convenience of banking in Andorra
Major credit cards, including American Express, Visa and MasterCard, are widely accepted in Andorra.
Along with finance, tourism is a very important industry for the Andorran economy, so most businesses have a global perspective and this aspect of moving to Andorra is relatively easy for newcomers.
Andorran banks offer a wide range of modern debit and credit cards with common features such as cash payments and compatibility with the Visa or MasterCard networks.
Brief description of the Andorran banking system
There aren’t many surprises when it comes to banking in Andorra. The Principality is increasingly integrated into the European financial system, and Andorran banks are modernizing both for the sake of their image and for the sake of their clients.
Those planning to move here should keep in mind that:
- A bank account in euros is a prerequisite for applying for a residence permit.
- Andorran banks follow common know-your-customer (KYC) practices and require various forms of identification from those wishing to open an account.
- There is an extensive network of branches and ATMs in Andorra, but some of the more remote areas will only have one or two banking groups.