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Moody's: CBA demonstrated capacity to handle crisis situations

Business Materials 31 August 2010 16:04 (UTC +04:00)

Azerbaijan, Baku, Aug.31 / Trend, N.Ismayilova /

The CBA demonstrated its capacity to handle crisis situations by taking preventative measures to address the liquidity shortages and asset-quality deterioration faced by local banks, said in the Moody's Investors Service Ltd's country economy research, received by TREND news agency's editorial office.

According to the report, the overall aim of these measures was to provide liquidity - in particular to ensure that the banking system has the necessary funds to refinance foreign borrowings - protect depositors, mitigate credit risk, and maintain lending within the economy. 

"These measures have helped the banks to weather the crisis in the short-term. In the long-term, we believe that more comprehensive regulatory improvements are needed to ensure banking sector stability (e.g., rules on limiting the exposure to foreign currency)," said in the report.

According to Moody's the CBA will not begin to withdraw measures related to liquidity support in 2010. The CBA likely wants to make sure that banks have enough liquidity to lend to the real economy. Therefore, the CBA will not withdraw support to the banking sector until banks have replaced CBA liquidity with alternative funding sources.

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