2018 was an intense year for the Andorran financial sector due to the work involved in transposing the “CRD IV Package” which, on the one hand, includes Directive 2013/36/EU on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms (CRD IV) and EU Regulation no. 575/2013 (CRR); and on the other hand, decrees transposing the European Commission’s acts as well as the technical communications from the Andorran supervisory body, the Andorran Financial Authority.

The aim of Law 35/2018 of 20 December on the solvency, liquidation and prudential supervision of credit institutions and investment firms is to increase the resilience of Andorra’s banking and financial sector, so that it is in a better position to deal with economic crises, as well as to ensure that credit institutions continue to finance business activity and economic growth with adequate equity. From the point of view of liquidity and financing, the law aims to ensure that institutions have sufficient liquidity cushions to face potential tensions in the markets, as well as a balance sheet structure that does not overly rely on short-term financing.

The law is not limited to the continuous monitoring of the creditworthiness and risk management of institutions, but also regulates supervisory rules, access to the business of credit institutions, suitability requirements for senior management and qualifying shareholders, as well as requirements for increased corporate governance.