One of Azerbaijani biggest banks examines Basel-III recommendations

Azerbaijan, Baku, Oct. 1 / Trend A. Akhundov /

Azerbaijani PASHA Bank is studying the Basel-III recommendations of the Basel Committee on Banking Supervision, PASHA Bank chairman Farid Akhundov told Trend on Monday.

"We are calculating the capital on Basel-III and understand the requirements specified in these recommendations," he said. "However, I cannot say that our bank is ready to implement them. If the CBA says that the banking sector of the country implements Basel -III from Jan. 1, as the Georgian Central Bank did, we will fail to do so."

Meantime PASHA Bank is examining the issue.

"This is great work," he said. "We have allocated some resources to study this issue, but did not study them fully. We know the requirements need to be prepared by Basel-III for banks but did realize the complexity. However, we are working on it."

"A leverage ratio which is one of the main tools for the protection and most important innovations of Basel-III has been successfully used in Azerbaijan since 2011," the Azerbaijani Central Bank told Trend earlier. "Moreover, the CBA relevant rules were amended whilst improving and enhancing the quality of the bank capital structure."

According to the CBA, the issue of increasing the adequacy ratio will be discussed within the road map recommended by the Basel Committee.

"Another question in the context of financial sustainability of the sector is associated with liquidity," the CBA said. "The opportunities of using two new tools recommended by the Basel Committee were evaluated. Though the liquidity coverage ratio has the same meaning as the instant liquidity ratio used in Azerbaijan, namely having a purpose of regulating short term liquidity, it is a more complex and sophisticated tool. This ratio was checked by us. The prospects of its application were discussed with the banking community."

In subsequent periods, the Central Bank is planning to use this ratio in the status of the regulatory requirement.

"Regarding the stable funding ratio designed for the regulation of long term liquidity, the tool is still a subject of discussion at a global level and must pass a significant test period," the CBA said. "Taking into account the prospects of a negative impact of this ratio within the balance between the policies of financial stability and long term financing of economic growth in the country, the CBA has decided to revise it in the future."

The PASHA Bank was established in June, 2007 and operates under licence of the Central Bank of Azerbaijan dated Jan.28, 2007.

The bank, along with Pasha Insurance, PASHA Life, Pasha Travel and Pasha Construction, is included in the Pasha Holding Company which is actually an investment company, but not a classic holding company.

Kapital Bank is also included in the structure of the Pasha Group. The Holding owns 99.75 per cent of the shares in Kapital bank.

PASHA Holding holds 60 per cent of the bank's shares, ADOR ltd- 30 per cent and Arif Pashayev- 10 per cent.

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