Banking in Andorra
- elizabethhelenpier
- Jan 5
- 5 min read
Updated: Feb 19
The banking industry has always been central to the Andorran economy, accounting for a big chunk of the annual GDP as of current. Nonetheless, despite the high importance banking has in Andorra, there are now only 3 banks in the country, due to the fact that this particular business has gone through some major changes in the past 10 years. This has had a knock-on effect with the range of services offered as well as on the quality of client relations. We list below all the advantages and disadvantages of the banking system in Andorra below, as well as giving you an overview of the history and future of the banks.
In the past, especially during the Franco era (dictatorship in Spain) and well into the 80s and 90s, you could simply come to Andorra with a suitcase of money and open a bank account. No questions were asked and banking secrecy was Andorra’s forte. This was common practice and was, at the time, considered quite normal. Therefore, undeclared money coming from Spain and many other countries, along with a booming economy in Andorra at that time, meant you had an array of Andorran banks.
Since banking secrecy is no longer applicable and since Andorra was taken off the ‘tax haven’ list, the banking sector has suffered. Adding to this, Andorra is neither a reference on an international scale as a banking hub where you can get good returns on your investments. Most people will still stick to either London, Switzerland, Luxembourg and alike.
If you want a bit of drama-sensational reading, there is a book called ‘El Andorrano’ by Joaquín Abad, that explains how some of the great fortunes of Andorra were made. A controversial book apparently based on true facts, but to read with a pinch of salt altogether.
History of banking in Andorra
In 1930 the first bank opened in Andorra under the name Banc Agrícol (agricultural bank). This is in fact one of the three remaining entities in Andorra, which now goes by the commercial name of Andbank. In that period the country had few roads and was just a collection of buildings and houses up dirt tracks. However, the founders of Andbank saw possibilities for electricity output and created the bank to rectify this. Over the coming 30 years more banks opened their doors:
Caixa banc 1934-1995
Banca Coma/international 1956-1973
Sobanca 1957-1968
Banca Cassany/BPA/Vallbanc 1957-2015
Banc Sabadell 2000-2022
Some of these banks were dissolved in a moment of crisis but most have merged or have been acquired by the remaining entities overtime; Andbank, Morabanc and Creand.
The story of the downfall of BPA
Banca Privada d’Andorra is well known in Andorra for its illicit history. It was only in 2015 that it was closed by order of the American, Andorran and Spanish governments. It began when The United States treasury department accused the bank of money laundering with Chinese, Russian and Venezuelan criminal funds. The Andorran and Spanish authorities ordered the closing of BPA and its Spanish subsidiary Banco Madrid in 2015. It was no longer considered a threat to the United States the year following. The assets then got sold to an American investment firm and the bank turned into Vallbanc by 2016.
The Andorran court case for money laundering against BPA begun in 2018. The Spanish courts dismissed their case but the Andorrans were not in agreement. The court case is still ongoing.
Future of banking in Andorra
The three remaining Andorran banks have gone through a rebranding phase over the last 10 years and are here to stay by all accounts. Changes in the banking structure are more likely to come from the agreement made with the EU which is currently in talks. One of the ideas of this agreement is to diversify the economy and optomise infrastructure, and with diversification likely come an effect on the banking system, possibly opening the doors for foreign banks to make their way into Andorra. This is all on the table of discussion currently meaning no one truly knows what will happen until the agreement is signed and the action plan is set in motion.
Advantages of Andorran banks
Low interest rates
When it comes to loans, financing and mortgages, Andorra has always been able to offer better loan conditions with lower interest rates than most other western nations.
Stability
After the BPA case, the USA treasury have a microscope on the Andorran banking system. It is highly unlikely you will find cases of illicit banking movements now for this reason which in turn means the rise of a new BPA case is almost impossible.
Smooth residency application
You will need an Andorran bank account to proceed with any residency application in Andorra.
Personal touch
The banks are the largest sector of employment in Andorra, and we live in a small country. It is likely you will quickly make a friend of a friend who is a bank manager. You might be lucky this way to have a door open for better conditions or better service.
Disadvantages of Andorran banks
Customer service
Quite simply terrible at times, and not comparable with other western nations, however this is a cultural trend and not the fault of the banking system. Do not expect return calls, emails answered or a knowledgeable or properly trained customer service team.
Low interest rates
On one side the low interest rates are fantastic if you are looking at financing. From the other perspective they are minimal when looking at investments and savings. Quite simply put there is never a day investing in an Andorran fund will surpass gains on a USD savings held abroad.
Closed mindedness
Modern vision is not at the forefront of Andorran banks. They are fairly traditional and conservative. Consequently, they do not have a modern, efficient, technologically advanced or flexible banking system. They will not apply much logic in decision making at the lower levels, despite the possibility of large gains. As an example, the average salary of a personal account manager is around €1,600 so here lies one major issue.
High fees
Unfortunately, you might be charged with every transaction done in and from your Andorran bank account. This is more likely to affect business accounts but can happen with currency exchanges and international transactions in personal accounts. The joining to SEPA has improved this but charges still somehow reappear. Discuss with your bank manager to cancel these charges if you see anything passing through your account.
