Rules for conducting stress-tests in banks approved in Azerbaijan
Azerbaijan, Baku, Nov. 3 /Trend, A.Akhundov/
The Central Bank of Azerbaijan (CBA) has adopted new rules for conducting stress-tests in banks, a source at the CBA said on Tuesday. The rules define the minimum requirements for conducting stress-tests in banks and local branches of foreign banks.
According to the document, the stress-tests are a tool for assessing the sensitivity of banks to the unexpected, exceptional, but possible shock situations.
"The stress-tests reveal the stability of capital of banks to shocks, the maximum loss that may be incurred by banks as a result of shocks, the defects in the activities of banks, the banks' dependence on macroeconomic factors, studies the evaluation of various risks and their relationship," the document says.
Stress-tests should be conducted at banks at least once per month.
Conducting stress-tests should be under the personal control of the bank's leadership.
Model of stress-tests for each bank should be prepared by the bank's division on risk management, be considered by the risk management committee and approved by the supervisory council. The model should be reviewed at least once per year, and, if necessary, more.