NBA ready for 2nd round of valuation of FSAR

Business Materials 16 February 2006 15:00 (UTC +04:00)

The National Bank of Azerbaijan (NBA) fulfilled all recommendations of the World Bank (WB) and IMF in regard to program on valuation of the financial sector of Azerbaijan (FSAR), Rufar Aslanly, a member of the Board of NBA, also head of Department for Supervisory over Activities of Credit Organizations, told Trend. It was the first valuation conducted in 2003. Nevertheless, Bank Supervisory Department and Monetary Department of NBA were ready for 2nd round in a year, Aslanly said.

Laws on banks and national bank, as well as normative acts were adopted after the first valuation. All they took into consideration the issues cited in the valuation of FSAR on first round. Besides, there is methodology of valuation developed by the Basel committee and used by experts of WB and IMF. Taking into consideration this methodology, we conduct own internal valuation that shows that we are ready and we have many things to demonstrate after the first round of the valuation, the representatives of NBA stressed.

It included all recommendations, which were cited in the Law on banks i.e licensing of bank activities. It determined such issues as share participation, demands for administration, setting of necessary quality criteria. The major element of regulation of current activities of banks was application of corporate management, institutional development of banks in the point of view of corporative standards. Other important recommendations included into the Law on banks were liquidation and banking failure up to international standards. According to Aslanly, all these recommendations were fully reflected in the bank legislation, including, issues related to the activities of NBA.

In the framework of FSAR the specialists of WB and IMF held stress-tests, which revealed high capacity if bank system to stand against risks of decrease of general figures. They testify that if the figures drop by 50-70%, bank system will not reach zero level and assets will exceed liabilities. This is a very good indicator.