NBA not to Change Capital Adequacy Norms in Azerbaijani Banking

Business Materials 14 April 2008 13:31

Azerbaijan, Baku, 14 April / corr. Trend / The National Bank of Azerbaijan believes that there is no need to set new limits for minimal volume of the capital of banks, as the last limit to the aggregate capital makes up AZN10mln which already exceeds the banking norms in European Union countries, said Rufat Aslanli, the Deputy head of NBA.

"The capital is for the payment of risks on the assets, but it is regulated by the norms of capital adequacy in international experience," said Aslanli.

This norm is set at 12% in Azerbaijan and we are not going to increase capital adequacy norms as it is lower than that of ours in the international experience and makes up 8%. The rise in norms in Azerbaijan, adopted in line with Basel standards, is necessitated by the need to protect banking from risks that can appear in transition economy due to the intensive development of banking.

According to Aslanli, the capital adequacy norms help banks to capitalize. In case of any breach of norms, the banks are not allowed to increase their assets.

At present, the average indicator of capital adequacy makes up 20% which shows that the banks have been enough capitalized in case of risks from assets.

"It is true that there are banks which develop dynamically and their capital is 15-16% which exceeds the norms, but they are being frequently capitalized,' said Aslanli.

In the course of 2007, the aggregate capital of banks doubled and exceeded AZN1bln. At present, there are 46 banks in Azerbaijan. The capital of 16-17 banks exceeded AZN10mln in the early 2007.

Some seven banks have been banned from attracting capital due to the capitalization problems.

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