Deposit and investment guarantee protection systems in Andorra

Deposit and investment guarantee protection systems in Andorra

Last October, Act 20/2018 entered into force to regulate the Andorran Deposit Guarantee Fund (FAGADI) and the Andorran Investment Guarantee System (SAGI).

This Act will entail Andorran banks adapting to the EU’s current regulation on deposit and investment guarantee schemes, as regulated by Act 1/2011, of 2 February, which implemented deposit and investment guarantee protection systems in the Andorran banking system.

Act 20/2018 allows the EU’s standards to be adopted in respect of the protection of deposit holders with funds in Andorran banks and investments in Andorran Banks and Financial Institutions in the Principality of Andorra, which will unquestionably result in greater security and trust in the sector.

1. Which customers are protected?

Section 3 of the Act sets out who the beneficiaries of the FAGADI and the SAGI are:

“The beneficiaries of the FAGADI scheme are natural and legal persons who are depositors at Andorran Banks, regardless of their nationality or domicile.”

Likewise, “the beneficiaries of the SAGI scheme are natural and legal persons who are investors who have investments deposited, managed or held in custody by Banks and Financial Institutions in Andorra, regardless of their nationality or domicile.”

2. What investments are protected? And up to what amount?

The FAGADI scheme protects balances held in current accounts and deposits. The SAGI scheme protects practically all other investments.

The Act sets the protection limits: as a general rule, both systems cover up to a maximum of 100,000 euros per customer and bank.

It is important to know this limit, as, for example, in a joint current account, the maximum limit of 100,000 euros in the FAGADI scheme applies to each of the account holders separately. Thus, in the case of two joint account holders the total maximum would be 200,000 euros, namely, 100,000 euros per account holder.

Likewise, a customer with a deposit of 100,000 euros and another 100,000 euros in investments would be entitled to a maximum protection of 200,000 euros (100,000 euros from the FAGADI scheme and 100,000 euros from the SAGI scheme).

There are exceptions that increase the cover given by the FAGADI scheme to up to 300,000 euros in certain deposits. The exceptions that apply to certain deposits and investments are posted on the FAGADI and SAGI websites. 

Finally, it must be taken into account that section 20 of the Act states that “the maximum limit of cover under the FAGADI scheme for the beneficiaries as a whole may not exceed 200 million euros (50 million euros in the case of the SAGI).”

3. When would the FAGADI and SAGI schemes come into play?

In the worst case scenario, the FAGADI and SAGI schemes would refund a customer the amount deposited or invested if a Bank was unable to fulfil its obligations, in line with the limits discussed in the previous section.

Luckily this scenario seems highly unlikely, given the general solvency of the banking sector in Andorra, and of MoraBanc in particular. However, as discussed above, this protection is essential in a European banking environment.

4. What if I would like further information?

At MoraBanc we comply with the information requirements of the Act and have posted the required information on our website and on our notice boards in our branches.

Should you require further information, we suggest to visit the FAGADI and SAGI websites. 

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