National Bank of Azerbaijan Develops Measures Plan to Remove Shortages in Banks’ Risk Management Systems
Azerbaijan, Baku, 4 Dec / Trend corr. I.Khalilova/ The National Bank of Azerbaijan has developed a special methodology to assess risks management systems at Azerbaijani banks, the NBA said on 4 Dec.
"Systems of banks have been assessed on the base of this methodology and they have got ratings," the NBA said. Measures plan has been developed to remove some shortages and at present this plan is being fulfilled."
The NBA assessed development strategy of banks in next years regarding potential of management. After it, banks have signed memorandums, defining directions of their activities on development strategy.
The NBA has taken preventive measures, providing banking system with AZN 350mln additional liquidity, under conditions of the world financial crisis to regulate liquidity in Azerbaijan.
Early Oct in 2008, refinancing rate was cut from 15% to 8% annual, norms of obligatory reservation on banking liabilities were cut from 12% to 6% both in national and foreign currency and norms of obligatory reservation on foreign liabilities - from 5% to 0.
The NBA took measures on prudential regulation to raise level of financial security in the banking sector in 2008. Under these measures, the NBA toughened rates on classification of assets: rates rose from 6% to 10% on the controlled assets, inadequate assets - from 25% to 30% and on unsafe assets - from 50% to 60%. Moreover, demands for ensuring real estate through loans rose from 120% to 150% and maximum amount of subordinated debt in capital of the first level was limited, which will be to 50%.
Level of risk of mortgage loaning should exceed from 50% to 100%. Release from payment of income tax, which is directed to capitalize banks and insurance companies, will be introduced in Jan 2009.
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