Rules for calculating capital of Azerbaijani banks to be revised (Exclusive)

Finance Materials 1 November 2019 20:51 (UTC +04:00)

BAKU, Azerbaijan, Nov. 1

By Eldar Janashvili - Trend:

In order to improve monitoring the risk profile of banks and switch to Basel III standards, changes in the “Rules for calculating the bank’s capital and its adequacy” of Azerbaijan’s Financial Market Supervisory Authority (FIMSA) will enter into force Nov.29, 2019, a source in the FIMSA told Trend Nov. 1.

This step is taken according to strategic priority 4.1 “Ensuring healthier risk management of banks” of the Strategic Roadmap for the Development of Financial Services in Azerbaijan.

In connection with new changes, in addition to credit risks, market risks and minimum capital requirements on operational risks, the procedure for calculating and disclosing a counter-cyclical capital buffer, as well as other factors are taken into account when calculating capital adequacy.

In addition, in subsequent stages, in accordance with the Basel II operational risk rules, risk classification, risk assessment using various tools and calculation of capital requirements for operational risks are provided.

Also, FIMSA’s recent becoming a member (since August 2, 2019) in the Basel Consulting Group of the Basel Committee on Banking Supervision will allow using the experience of various countries by bringing FIMSA to a wide dialogue platform, submit proposals to the Basel Committee and thereby fully adapt the legislation on banking supervision and regulation to Basel standards.