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of April 24, 2020 No. 16/1-2
About approval of "Rules of calculation of banking capital and its adequacy"
Based on article 22.0.17 of the Law of the Azerbaijan Republic "About the Central bank of the Azerbaijan Republic" the Board of the Central bank of the Azerbaijan Republic DECIDES:
1. Approve "Rules of calculation of banking capital and its adequacy" (are applied).
2. Cancel the "Rules of calculation of banking capital and its adequacy" approved by the Resolution of the abolished Chamber on supervision of the financial markets of the Azerbaijan Republic of November 16, 2018 No. 1851100015, and change in these rules approved by the Resolution of October 18, 2019 No. 1951100033.
2. Charge to Department of the right (Rena Melikova) to provide in three-day time submission of this Resolution to the Ministry of Justice of the Azerbaijan Republic for entering into the State register of legal acts of the Azerbaijan Republic.
Chairman of the Central bank
Approved by the Resolution of Board of the Central bank of the Azerbaijan Republic of April 24, 2020 No. 16/1-2
1.1. These rules are developed according to Articles 21. 1, 34.2.1, 34.2.2 and 34.2.3 of the Law of the Azerbaijan Republic "About banks" (further - "Law").
1.2. These rules determine structure, components of the aggregate capital of the banks operating in the Azerbaijan Republic and local branches of foreign banks (further - banks), coefficients of adequacy and leverage, their minimum size and rules of their calculation.
2.1. The concepts used in these rules designate the following:
2.1.1. the aggregate capital (for local branches of foreign banks of means, equated to the aggregate capital) - being the capital used for the purposes of the prudential reporting, the amount of components (elements) included in the capital of the I level (main) and the II level (additional) determined by these rules and difference of deduction from them;
2.1.2. the assets weighed on risk degree - the cost of balance sheet assets and off-balance obligations estimated based on risk degree of everyone after deduction of deduction;
2.1.3. coefficients of adequacy of the capital - the relation of the capital of the I level estimated on the formulas established in these rules and the aggregate capital to the assets weighed separately on risk degree;
2.1.4. the counter-cyclical buffer of the capital - the buffer from the capital of the I level established by the Central bank of the Azerbaijan Republic (further - the Central bank) according to economic cycle and dynamics of credit portfolio;
2.1.5. converting coefficient to the credit - the indicator allowing to transform off-balance obligations of bank to the cost of balance sheet assets;
2.1.6. "ordinary" resources for compensation of damage on assets - the resources created for compensation of possible damages on "standard assets" of bank;
2.1.7. "target" resources for compensation of damage on assets - the resources created for compensation of possible damages on "non-standard assets" of bank;
2.1.8. hybrid elements of the capital - the urgent or termless financial instruments combining features of shares and debt obligations, including non-cumulative termless preferred shares, cumulative termless preferred shares, subordinated debt obligations and other similar securities;
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