Azernews.Az

By Gulgiz Dadashova

The Central Bank of Azerbaijan (CBA) has made compromises to commercial banks in mid November over the implementation of its direction on increasing capital requirement.

CBA Director General Rashad Orujov said now the Bank urges the commercial banks with capital shortage to submit their plans for increasing capitalization by January 15 2014.

Azerbaijani banks are required to have a total capital of no less than 10 million manats (over $12.7 million). However, the new requirements of the CBA will take effect from January 1, 2014, after which the total capital should be at least 50 million manats.

Earlier CBA Chairman Elman Rustamov said the analysis showed that the commercial banks that form 95 percent of Azerbaijan's bank assets would fulfill the requirement on increasing the aggregate capital up to no less that 50 million manat in time.

"However, it's unlikely that the banks that form 5 percent of the assets will be able to fulfill this requirement by January 1, 2014. Therefore, to protect the rights of the depositors, debtors and creditors the CBA Board of Directors has made a decision to grant additional time and wait till the end of 2014 for those banks that are unable to fulfill the new capital requirement in due time. Until the next year, we expect those banks with capital shortage to fulfill our capital requirement by increasing their capital, performing consolidation process, or transforming into credit institutions of lower levels," Rustamov said.

Currently, eight banks have capital exceeding 100 million manat. The capital adequacy ratio of the banking sector in Azerbaijan is 17 percent. This is twice the requirement of international standards, and is higher by five percentage points than the minimum standard set by the CBA.

Since the announcement of the new regulatory capital requirements to commercial banks, the total amount of the bank capital increased by 48 percent (one billion manat), reaching 3.2 billion manat.