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IMF: Capital requirements for Azerbaijan's systemically important banks should be tightened

09 April 2025 15:03 (UTC +04:00)

In Azerbaijan, stricter capital requirements should be set for systemically important banks (i.e., large banks that are of strategic importance to the country), this assessment was made in the final statement for 2025 under Article IV of the International Monetary Fund's (IMF) Articles of Agreement, APA-Economics reports.

The IMF noted that the Central Bank's steps to address risks in the banking sector, especially the imposition of an additional 0.5% capital reserve requirement for banks starting from March 1, 2025, and the increase in reserve norms for banks with a high concentration in their deposit portfolios, are positive steps.

However, the Fund recommends continuing reforms in four areas: "Stricter capital requirements should be set for systemically important banks (i.e., large banks that are of strategic importance to the country). Consolidated supervision should be fully implemented. This means that banks and all their subsidiaries and related entities should be subject to supervision. Resolution plans for banks to be used in times of crisis should be developed and finalized. The Emergency Liquidity Assistance (ELA) system should be strengthened so that the Central Bank can intervene quickly when pressures arise in the financial markets."

The IMF believes that these measures will ensure the sustainable development of the banking system, strengthen financial stability, and increase the flow of credit to the real sector.