President of Andbank Manel Cerqueda i Donadeu tells all-andorra.com about the banks’ financial results from 2015, its development plans and macroeconomic situation in the world:
Interview: Steven Broyden
What are the bank’s financial results from 2015?
The volume of assets under the bank’s management currently amounts to 23 billion euros. Due to the international expansion which has taken place over the last 10 years, the volume of assets managed by the Bank has grown to be almost 4 times larger: from only 7 billion euros in 2005, to 21.5 billion euros in 2014.
By 2015 Andbank was being represented in 12 countries: Andorra, Brazil, Spain, Luxembourg, Monaco and Bahamas (banking license), in Panama (international banking license), Israel (Fund asset management through the investment house “Sigma”), in Uruguay (representative office and securities agency), Switzerland (property management), Miami (holding, asset management) and in Mexico (independent investment Advisor).
How did the scandal with the Bank BPA (Banca Privada d’Andorra, SA) influence the results of Andbank in 2015 and affect the Andorran financial system in general?
The BPA scandal has seriously affected the financial system of the Principality. But despite this situation, in 2015 our financial results grew by 7%. This increase is certainly lower than previous years that was about 20% per year, however, this is not only because of the situation with BPA, but also due to global economic trends.
It’s not the fact that the current situation in the world financial market will change, but we are convinced that with the right policy of our bank, we will soon be able to return to our previous levels.
Did the bank enforce additional security measures and internal audits of old and new customers?
Andbank doesn’t need to change the security system because we have always followed the strictest rules. We have a special department responsible for “compliance” procedures, and also for safety. Andbank closely monitors cash flow sources and transfers, not only made by new customers but by all existing customers too. We also have an audit department that does their job well.
In other words, verification processes and background checks on new customers didn’t increase?
As I said, we always follow the most stringent criteria in the security matters when opening accounts for new customers. We didn’t need to change anything.
Are there any limitations on working with individual countries? Is there a “black list” of the countries with which Andbank prefers not to do business?
Taking into account the situation in some countries, there are several countries with which we prefer not to work. There are also countries with which we collaborate with, but very carefully.
“Banking secrecy” is dead by now. Does Andbank plan to change its policy towards “private banking” services?
One of the advantages of our Bank I would say is the ability to foresee events and to analyze them in time to adapt to the changes. Due to our international expansion, that I already mentioned, we have become an international Bank.
From your point of view, why are foreign banks or their subsidiaries not represented in the banking sector of Andorra?
The Andorran banking system is open. However, the market is very small to be attractive to foreign banks. Now in Andorra there are 4 banks, and I think it is enough for our small country.
What is happening with the fifth Bank – BPA, and how might the situation affect Andbank?
The organization, created specifically for the restructuring of the Bank – AREB, must complete the process of separating the “infected” assets from the “clean” assets and make a decision about the future of the Bank. First of all, we need to see if there are candidates interested in buying the “clean” assets from the new bank.
The Agreement on the automatic exchange of tax information comes into force in 2018. Do you expect the outflow of capital from Andorra to change?
The automatic exchange of tax information concerns the citizens or residents of Europe. Capital outflow could occur if investors do not want to declare the money accumulated in the accounts in Andorra and to report to the tax authorities in their countries. In this case, they really can’t keep their accounts here, in Andorra. But as you know, most of the countries have already signed a similar agreement. This means it will be impossible to keep undeclared money anywhere in the world.
Why is the investment and brokerage services market not well developed in Andorra?
Really in Andorra there are no investment banks. Andorran banks operate in the field of commercial services and services of “private banking”. Investment banks are another category. Of course, there are large international institutions that are able to offer Andorran customers investment and brokerage services, but not the Andorran banks. We don’t have the relevant work experience and do not plan to develop this area.
Despite the global banking crisis, Andbank still participates in quite aggressive international expansion worldwide. What were the latest international deals Andbank was involved in?
About 80% of Andbanks´assets are foreign. There are some financial structures Andbank purchased with their own client base. The biggest acquisition of this kind I would say was the Spanish company Inversis – the transaction took place in 2014. There are also a few international structures that Andbank made from zero.
How did these transactions affect Andbank’s capitalization and diversification of its customer portfolio in particular?
We have diversified our client portfolio and banking products, under the jurisdiction of the country in which the transaction took place. That is, the products that we offer to our customers in Brazil differ from those presented in the Mexican market, for example. There is a standard list of banking products at the international level, and we also have specific portfolios for certain countries.
Does Andbank plan to expand its presence in other European countries, and also in Latin and South America?
There are no such plans for the moment.
Does Andbank plan to enter the economic markets in Russia, CIS or Asia?
We have consolidated a sufficient amount of foreign assets and now want to concentrate on what we already own.
What are the characteristics of the programs which provide loans to legal entities and individuals – potential large investors in the Andorran economy?
We work with all types of loans which commercial banks have the right to work with: mortgage and consumer loans and loans to small, medium and large businesses. We mainly work with clients who are residents in Andorra. Loans to non-residents are also available if the purpose of the loan is targeted towards business development in Andorra.
What are the conditions to get a loan to buy commercial and residential property for residents and non-residents (or citizens) of Andorra?
Each application is studied separately. For example, if you are a resident of Andorra and want to buy a property in Andorra, Andbank may finance the transaction by 80% of the total value of the property. The terms of payment in this case is variable and fixed by the annual rate of EURIBOR +2%.
Can you tell us more details about working with Andbank’s important or VIP customers? Are there programs to encourage these customers to invest more?
VIP-clients have a large range of possibilities in the field of financial solutions. The clients always work with our personal manager who creates their portfolios depending on the amount of capital and needs. We also offer all our VIP clients the opportunity to participate in Club Deals transactions.
Does Andbank work with gold bullion and other precious metals?
Yes we work a little with these types of products. We have customers who prefer to buy gold and precious metals directly in the market as an investment. But, as far as I know, the imports of gold and precious metals in Andorra are very small.
Is Andbank ready to transform its’ services in line with “settlement bank services”? This type of service is now in demand in the Andorran market due to the increasing number of new companies registered in Andorra. And all these businesses need fast and efficient banking services on an international level…
Andbank is always ready for changes and is able to adapt quickly to the growing market of “settlement services”. Our staff and management (as well as our structures) responsible for this type of software are now ready to offer these sought-after services to new businesses registered in Andorra. Our international banking network offers a great selection of products and services for all types of clients.
The Andorran banks’ tariff policy is not competitive compared to, for example, banks in France and Spain. Does Andbank plan to revise the tariff policy? I mean tariffs for money transfers, accounts servicing and securities transactions?
We work with the same rates as banks in Spain, for example. I think our rates are quite competitive.
Does the Bank have non-core assets?
What was the total amount of mortgage loans made by Andbank in 2015 for residents and non-residents of Andorra?
Unfortunately, I can´t reveal this data.
Does Andbank offer any alternatives for those who would like to get a “passive residency” in Andorra, aside from investing in real estate market?
Yes, it’s not necessary to buy property in Andorra to obtain the status of passive resident. The required amount of investment is 400 000 euros: we offer all financial instruments, for example, debt obligations issued by financial institutions of Andorra, authorized capital shares of the Andorran company, or you can simply deposit that amount into the national Institute of Finance of Andorra (INAF).
Does Andbank have any competitive advantages or disadvantages compared to private banking in Switzerland, Luxembourg or Liechtenstein?
In practice all banks offer approximately the same services. Andbank differs because we offer the customers the most personalized customer service. We invest in recruiting highly qualified professionals to serve our customers quickly and efficiently. Currently Andbank worldwide employs about 1,100 people.
What does Andbank now need to change to meet all international banking requirements?
We are ready for any changes, and thanks to our staff and IT technologies, we hope to be ahead of our competitors.
What is Andbank’s policy regarding sponsorship and charity? Please give some examples of the most significant projects the bank has been involved in, in this area. What are the budgets for these types of donations?
We always try to find a compromise between the development of new businesses and business companies that have been present in the market for a long time. We support interesting educational programs and we invest in projects related to healthcare and scientific research. We also sponsor some sporting events. Among the organizations that we support are; the Olympic Committee of Andorra, the Red Cross, a school for children with disabilities (school Meritxell), and the Foundation for the study of cancer (Fundació Privada D’estudis I Recerca Oncologica Fero).
Could you give an overview of the Bank’s strategy for the next few years?
To continue the business as a commercial and private Bank in Andorra and throughout the world, strengthening its position in the local market.
Your macroeconomic forecasts: what will happen with prices for oil, gold, and currency exchange rates?
Because of the political situation in the world now, it is a difficult time to make predictions. The world economy is currently in a crisis. I think that this year oil prices will not change significantly and will remain at 30-40 dollars per barrel. The growth of energy consumption will not be as rapid as in recent times because it concerns, first of all, big players such as China, Brazil and India. The price of gold and other precious metals will remain relatively stable.
How many shareholders are there in Andbank now?
The Bank’s two major shareholders are the Cerqueda and Ribas families. A small portion of our shares are owned by other private shareholders.