BAKU, Azerbaijan, March 2. S&P Global Ratings views favorably the track record of Azerbaijan Central Bank’s new management over past 4 years, Trend reports.
“We view favorably the track record of the CBA's new management over the past four years. All banks comply with Corporate Governance Standards, which were implemented in 2024, having restructured Supervisory Board Committees and appointing independent Supervisory Board members. To proactively address risks from rapid credit growth over the past three years, the regulators activated a countercyclical capital buffer of 0.5% from March 2025. In addition, they tightened regulation for consumer loans and credit cards, the most rapidly growing segment. The banking system remained stable over 2024-2025.”
S&P believes that the effective implementation of the initiatives to modernize the banking regulation and supervision in Azerbaijan should bring it closer to international best practice.
“These initiatives became most pronounced over the past three years under the Financial Sector Development Strategy for 2024-2026, under the leadership of the Governor of the Central Bank Taleh Kazimov. We note that the scope of the regulatory initiatives has considerably expanded. The main achievements over 2024-2025 were: corporate governance standard for banks, a regulation limiting related party transactions, regulation on liquidity risk management aligned with Basel III requirements, new regulation on management of operational and market risks, and strengthened regulation on banks’ prudential reporting,” reads the latest report by S&P.
The rating agency notes that in 2026, the regulators plan to roll out risk-based supervision to all banks, implement IFRS9 reporting, manage the banking sector transition to Basel III capital adequacy framework, strengthen requirements for banks’ stress testing and long-term liquidity management, introduce Internal Capital Adequacy Assessment Process and Internal Liquidity Adequacy Assessment Process requirements, and develop consolidated approach to supervision, and resolution framework.
“We believe that effective implementation of these initiatives should further strengthen regulation and supervision for banks in Azerbaijan. The regulator is putting more emphasis on addressing newer and emerging risks. To increase awareness of environmental, social and governance risks in the banking sector, the regulator implemented its 2023-2026 Sustainable Finance Roadmap. The CBA continues to strengthen the cyber resilience of the banking sector through a risk-based supervisory framework, sector-wide coordination, and enhanced regulatory requirements. The Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism stresses considerable improvements in the anti-money laundering /countering the financing of terrorism (AML/CFT) legal framework in Azerbaijan over the past several years. However, certain technical gaps in relation to the money laundering offence and related sanctions remain. The authorities implemented the National Action Plan in relation to AML/CFT for 2023-2025.”