BAKU, Azerbaijan, October 29. The Central Bank of Azerbaijan (CBA) is currently targeting returns of 0.3–0.5% from securities lending operations, the governor of the Central Bank of Azerbaijan (CBA) Taleh Kazimov said, Trend's correspondent reports from the event.
He made the remarks at a press conference on Thursday following a meeting on the parameters of the interest rate corridor.
According to him, the primary purpose of these operations is not to generate substantial income, but to cover securities custody costs and earn additional returns.
“Our goal is not to maximize income. The aim is to cover the costs associated with holding these assets and generate some additional revenue. We are not talking about substantial returns here. Globally, yields range from 0.3 to 0.4–0.5%. Depending on the securities involved, this figure can rise to a maximum of 1%,” Kazimov said.
The CBA governor noted that the operations are currently planned to continue at a volume of 1 billion manat ($588.2 million).
“We will continue with 1 billion manat ($588.2 million) for now. We invest in securities and earn income from repo transactions. However, there are custody costs associated with holding these securities. In most cases, this mechanism is used to earn an additional spread of 0.3–0.5% on top of the interest income we receive. This is achieved through securities lending, and the returns also depend on the volume of securities involved,” Kazimov said.
He added that the mechanism is one of the instruments the Central Bank uses to manage its assets and reserves.
“Authorization has been granted to use the custody mechanism for assets worth 1 billion manat ($588.2 million),” he said.
