CBA changes rules for calculating banks' capital adequacy

By Trend

The rules of temporary regulation of the activities of credit organizations in connection with the coronavirus pandemic, approved by the Central Bank of Azerbaijan (CBA), come into force in Azerbaijan, Trend reports with reference to the CBA.

These rules, designed to reduce the possible negative impact of the coronavirus pandemic (COVID-19) on the banking sector of Azerbaijan and aimed at improving the efficiency of banks and credit organizations, determine the classification of loans and risk groups, the capital adequacy ratio and the procedure for calculating it, which allows calculating the adequacy of bank capital without taking into account the pandemic risks of consumer loans issued by banks from May 1 to January 1, 2020.

So, when calculating bank capital for consumer loans, subparagraphs 9.3.8.2, 9.3.8.3, 9.3.9.1, 9.3.9.2, 9.3.10.1 and paragraph 9.4 of the rules for calculating bank capital and its adequacy will not be applied until January 1, 2021. The rules determine the 'percentage risk groups' and coefficients for different types of consumer loans.

In addition, business loans in national currency issued to manufacturers of medical devices and equipment and confirmed by documents of appointment belong to a 20-percent risk group (coefficient 0.2).

At the same time, the adequacy ratio of total capital for systemically important banks until January 1, 2021 cannot be less than 11 percent, for other banks - less than 9 percent. Also, the countercyclical capital buffer is set at zero percent until this date.

From the day this rule comes into force and until January 1, 2021, market and operational risks, when calculating the adequacy ratios of capital of the first degree and total capital, are not taken into account.

In addition, in order to maintain the position of capital and financial stability of banks, dividend payments according to the results of previous years should be postponed until September 30, 2020, and interim dividend payments for 2020 should not be made.