A financially-sound banking sector committed to society

Due to the unexpected emergence of the SARS-Cov-2 pandemic (COVID-19), the optimistic perspectives predicted for 2020 have been completely reversed, a fact which is affecting the worldwide economy and which will have a relevant impact on national economy.

The Andorran Government has responded forcefully in preventing the spread of COVID-19 and to protect the health of the population while at the same time adopting exceptional economic measures in order to sustain the production system, helping out businesses and families and encouraging a swift economic recovery. It has become clear that health and economy are connected and that the banking industry holds a key role by offering liquidity and funding to the system.

The banks have been ready and committed to a quick execution and support of the economic measures approved by the Andorran Government in order to mitigate the economic effects of COVID-19 and maintain industry production, work places and the support for families as much as possible. The Andorran banks are in a position to offer financing to the Andorran economic system.

At the close of 2019, Andorran banks showed positive figures both in growth and consolidation of the new model. To this fact, we have to add the rating action taken by Fitch on April 20, viewing the Andorran banking sector as more resilient than at the start of the previous crisis in the country in 2011-2014 and therefore benefitting from a more specialized management and holding corporate governance policies aligned with international standards.

The solvency of the banks (the CET1 solvency ratio phase-in is 16.98% as of 31 December 2019, higher than the average of European banks) is what will allow us to overcome this crisis with guarantees, for the banks and for the economy in general. Andorran banks provide the Government and society with liquidity and financing in order to overcome these hard times and therefore, have to be a part of the solution in resuming business. From the banking sector we will stand by companies, the self-employed and families so that they are not left behind in this COVID-19 crisis due to liquidity problems.

The banking sector is one of the few that has not stopped its business and has continued to offer its services with professionalism and responsibility, adapting its logistics, products and services in order to guarantee the security of its workers and clients and at the same time cover customers’ needs. Remote channels allow for on-line banking, telephonic assistance and ATM services. After this crisis, it is probable that the client’s new habits derive in a different way of working that is more efficient and adapted to his or her needs.

The next few months will be complex and the entrepreneurial world will need some time to recover from the impact of this crisis. The banking sector will continue at the Government’s side as well as the companies’ side, and will support families to recover the national economic balance.

The banks will continue to perform their role which is to preserve financial stability in these times of crisis, thanks to their solvency and strength. They will continue to stand side by side with their clients, providing liquidity to those companies or families with temporary liquidity problems so they can access financing or deferment of their financial obligations which will help them tackle the difficulties of this crisis. They will also suggest solutions so we can return to normality as soon as possible.

We will get through this!

Economic measures to support the country’s businesses and families

Andorran Banking has been involved in the different working groups with public institutions and other economic agents which have been preparing measures and contingency plans for businesses, individuals and families to overcome the economic effects of the temporary shutdown of the country caused by Covid-19.

Measures approved by the Andorran Government:

The aim of the measures approved by the Government has been to protect jobs and productivity, to apply measures of co-responsibility and proportionality as well as to guarantee the state of law.

The measures approved include matters such as employment, national health, fiscal and tax, leases and banking loan facilities.

Some of these measures are:

* Temporary suspension of work contracts, reduction of working hours, compensation of work time and paid leave to take care of children.

* Suspension or reduction of self-employed contributions, financing of contributions by companies and temporary disability benefits in cases of isolation or diagnosis of SARS-CoV-2.

* Delay or payment in instalments of fiscal obligations, or the partial recovery of private pension plans.

* Reduction of commercial and housing leases for those legal persons and individuals that have been affected by COVID-19.

* A period of grace for mortgages or personal loans to finance the purchase of housing and cars, for those affected by COVID-19.

Extraordinary financing programs:

To the aforementioned economic measures, we must add the approval of a 130 million euros facility aimed at businesses and the self-employed, and a credit facility for 50 million euros destined to cover expenses incurred due to the current emergency situation.

With these measures, banks ensure liquidity and financing of the Andorran economy, standing by the country and their clients since no business or family should fall behind due to the lack of liquidity.

Other complementary measures approved by the banking entities:

In this context, the banks have also agreed not to enforce companies and individuals for default of payment until June 30, when the default is a result of the lack of liquidity originated by the COVID-19 emergency situation.

Furthermore, banks will not apply overdraft fees or interests for late payment to those businesses or the self-employed who have applied for a credit facility which they are still in the process of formalizing.

Increase of the limit for contactless payments with cards

Within the context of the exceptional measures taken to fight COVID-19, the banking entities have agreed to temporary increase the limit from 20 euros to 50 euros for contactless payments with cards, with the aim of reducing contact with the point-of-sale terminals when introducing the PIN number.

This measure has gradually been implemented by the banks in small and large businesses, and will be in place as long as the Government’s COVID-19 exceptional measures continue.

Professionals in the banking sector, an essential asset

Following the recommendations made by the Ministry of Health and the Ministry of Presidency, Economy and Business of the Andorran Government, from the very start of this crisis Andorran banks have exercised their measures to prevent the spread of COVID.19. Over 80% of the banking workforce are working from home while ensuring banking operations are not interrupted and recommending the public to only physically go to the bank in essential cases and to use the remote channels offered by the entities to operate and thus contain the transmission chain.

Andorran Banking sends a message of gratitude and support towards all the workers of the banking sector whose commitment has made financial services available to clients at the same time as preserving their security.

Bank accounts for donations

The Andorran Government has opened bank accounts in each of the Andorran banks for donations from individuals and businesses who have expressed their desire to help economically in these exceptional moments.

The funds received will be destined to buy medical equipment, to promote actions aimed at helping out the most vulnerable and to cover expenses related to voluntary work.

Andorran Banking continues to actively cooperate and make itself available to the Government to offer tools to contain the impact of this health crisis as much as possible.

In the face of this crisis, the Andorran population have shown their solidarity and commitment and within 20 days 2 million euros haven been collected.

Gradual lifting of quarantine

Early isolation and the civilized attitude of the population, which followed the authorities’ indications from the very start, have been the key to containing the transmission chain of COVID-19, which has been more reduced than in other countries, permitting a fast stabilization of the infection curve.

Therefore, and always following the latest epidemiologist data, Andorra has started working on lifting the quarantine by phases in different sectors and these will increase depending on the progress of the infection curve.

The aim of the Andorran Government is to progressively recover the economic activity of the country while preserving the health and epidemiologic criteria to overcome this virus.