Azerbaijan increases stability of banking sector (UPDATE)
details added (first version posted at 17:09)
Baku, Azerbaijan, Dec. 29
By Azad Hasanli - Trend:
The Central Bank of Azerbaijan (CBA) has reduced the amount of the capital adequacy ratio from 12 to 10 percent and the capital adequacy ratio of the Tier I banks - from 6 to 5 percent since December 29, 2015.
This is envisaged by the changes in the "Bank capital settlement rules and its adequacy".
The CBA also reduced the level of "leverage" (a tool connecting the growth of assets to the growth of the capital) from 6 to 5 percent.
The CBA has restored the "leverage" norm since February 2011 [which was canceled in 2003]. Along with the balance sheet assets, off-balance sheet assets were included in the settlement procedure. The requirement was set at 8 percent [compared to 6 percent before the cancellation] as the "leverage" norm was intended to limit the banks' strong growth. While introducing the "leverage" norm, the CBA's main objective is to ensure the management of capital, liquidity and credit risks at a safe level.
"This tool allows controlling the steady growth at a good capital base, growing on a sound base, controlling the level of capital, achieving a good correlation of assets and capital growth," CBA Director General Rashad Orujov told Trend earlier. "This is very important. This is a very effective tool. It is beneficial as the asset growth is supported by good capitalization. "