The Central Bank of Azerbaijan (CBA) has given local banks 1 year to align their capital with Basel III standards.
Modern.az reports this, citing the CBA.
It should be recalled that changes were made to the "Rules for Calculating Bank Capital and Its Adequacy" by a decision adopted by the institution's Management Board on December 16 last year. This step was taken to strengthen financial stability in the banking sector and increase compliance with international regulatory standards, stemming from the "Financial Sector Development Strategy for 2024 – 2026".
With the aforementioned changes, the structure of bank capital, capital adequacy ratios, capital buffers, and a number of other requirements and regulations have been aligned with Basel III standards.
According to the changes, the implementation of new capital buffers will increase banks' resilience to potential losses, facilitate more accurate risk assessment and improve the quality of bank capital, as well as provide additional support for sustainable financing processes of the economy.
At the same time, the completion of the process of aligning capital requirements with Basel III standards will not only ensure the strengthening of prudential policy and the supervisory framework but also contribute positively to the attractiveness of the banking sector for international investors.
Banks have been given a 1-year transition period for adaptation to the new capital structure, alignment of internal bank rules and procedures with new regulatory requirements, as well as for conducting necessary training in the sector and integrating new approaches into prudential reporting. Thus, full compliance with the new requirements will be demanded from banks starting from January 1, 2027.
