BAKU, Azerbaijan, May 3
By Eldar Janashvili - Trend:
The regulatory framework outlined in the credit policy support program on the banks forming the system and other banks is connected with the fact that the regulatory framework associated with the corresponding banks is different due to the recent changes in the legislation, Financial analyst at the Azerbaijani Center for Economic Reforms Analysis and Communication Ayaz Museyibov told Trend.
Museyibov was revealing the details of the new Digital Economy Support Program.
“The system envisages a decrease in the adequacy ratio of total capital on major banks from 12 percent to 11 percent by January 1, 2021, on other banks - from 10 percent to 9 percent, taking into account such factors as bank assets and liabilities, securities, payment systems, off-exchange transactions,” the analyst said.
“Big support related to the indicators of capital adequacy was rendered to the banks in five main spheres,” the analyst added. “Thus, in accordance with the recent changes in the banking legislation, the minimum demand for the adequacy ratio of banks of the system was 12 percent, while other banks - 10 percent.”
“While calculating the adequacy ratio of total capital during 2020, the market and operational risks will not be taken into account,” the analyst added. “In accordance with the relevant legislation, the adequacy of the bank’s capital was calculated as the ratio of total capital to the amount of assets measured at the credit, market and operational risk.”
“Presently, only credit risk calculations will be carried out for prudential reporting,” Museyibov said. “At the same time, a twofold decrease in the risk coefficient on mortgage loans issued by banks at their own expense until April 1, 2020 will again cause an accumulative adequacy ratio through a decrease in the risk indicator.”
“Moreover, the deferral of additional capital requirements on consumer loans will directly affect the capital adequacy ratio until January 1, 2021,” Museyibov said. “Taking into account that the share of consumer loans is high in the country's portfolio of banks, it is possible to say that this effect will be justified."
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