CBA plans to reconsider regulatory framework on capital adequacy norm

Azerbaijan , Baku, June 8 / Trend A. Akhundov /

The adequacy of the total capital of the Azerbaijani banking system as of the first quarter of 2011 amounted to 16.6 percent, exceeding the minimum standards of the Central Bank of Azerbaijan (CBA) defined at 12 percent, the CBA's report on financial stability said .

" T he tendency of strengthening the capital base of banks was continued in t he first quarter ," the report said . " As a result, the index of the capital adequacy of the banking sector exceeded the accepted norms . "

T he adequacy of the capital of the first level for the year increased from 13.5 percent to 14.4 percent, exceeding the standards by six percent.

The r egulatory requirement of the Basel Committee on capital adequacy is 8 percent, and the CBA - 12 percent (this rate is relatively high).

According to the report, CBA plans to reconsider the regulatory framework for this index and to develop an individual approach to each bank

"The CBA's capitalization and the quality of bank management will be improved within the "Basel III" standard to maintain the stability of the financial system ," the report said . " In this regard, special emphasis will be placed on improving the capital structure. Moreover , the standard "leverage" was used in February 2011 . A ccording to it, the banks must bring a balanced capital in accordance with the a ssets and off-balance sheet assets. This measure is used to prevent rapid growth of banks . "

The aggregate amount of the capital of the Azerbaijani banking system in the first quarter, exceeded the index of 2010 by 0.8 percent and increased at an annual rate by 8.7 percent, or 1 . 534 billion manat - up to 1.91 billion manat.

The shareholders ' funds were main source to preserve the stability of capital. T he authorized capital of banks increased by 1.2 percent (16,3 million manat) c ompared to early 2011 .

" T he quality of banks' capital has been also increased," the report said . " Thus, increasing the share of the capital of the first level in total capital up to 86.7 percent contributed to the growth of capital quality in the banking system as a whole . "

The s tructure and dynamics of the total capital of the banking system ( million manat ):

Jan. 1, 2010

Jan. 1, 2011

April 1, 2011

Capital of the first level

1285,5

1520,5

1657,9

Authorized capital

1144,6

1359,4

1375,7

Additional funds from the issue of shares

20,7

20,7

20,7

Retained earnings

138,8

169,2

294,5

Capital of the second level

531,0

440,1

318,3

Profit of the current year

269,6

165,8

48,6

Total reserves

122,8

139,8

143,0

Other funds of capital

138,6

134,4

126,7

Deductions from total capital

57,0

63,4

64,8

Aggregate capital after deductions

1 758,9

1897,1

1911,4

The official exchange rate is 0.7888 manat to $1.

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