State register of legal acts
of July 25, 2012 No. 20/3
About approval of "Rules of calculation of banking capital and its adequacy"
For the purpose of strengthening of financial stability and line item of the capital, and also improvement of quality of the capital in banking sector, reductions of requirements of banking supervision in compliance with the international standards Board of the Central Bank of the Azerbaijan Republic according to articles 21 and 34 of the Law of the Azerbaijan Republic "About banks", article 22.0.17 of the Law of the Azerbaijan Republic "About the Central bank of the Azerbaijan Republic" decides:
1. Approve "Rules of calculation of banking capital and its adequacy" (are applied);
2. Charge to legal department (R. Melikov) to provide within 3 days submission of this decision to the Ministry of Justice for inclusion in the State register of legal acts of the Azerbaijan Republic;
The Decision the Central bank of the Azerbaijan Republic of July 25, 2012 is approved No. 20/3
1.1. These rules are developed according to the Laws of the Azerbaijan Republic "About the Central bank of the Azerbaijan Republic" and "About banks".
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 of the capital, their minimum size and rules of their calculation according to the principles established by Basel Committee on Banking Supervision.
2.0. The concepts applied in these rules express the following values:
2.0.1. the aggregate capital (for local branches foreign the bankovsredstvo equated to the aggregate capital) - being the capital used for the purposes of the prudential reporting it is 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.
2.0.2. the assets weighed on risk degree - the cost of balance sheet assets and off-balance obligations estimated on own risk degree (expresses degree of the relative risk arising in connection with various assets);
2.0.3. coefficients of adequacy of the capital - the relation of the capital of the I level estimated on the formulas determined in these rules and the aggregate capital to the assets weighed on risk degree;
2.0.4. converting coefficient to the credit - the indicator allowing to transform off-balance obligations of bank to the cost of balance sheet assets;
2.0.5. "obykny" resources for compensation of damage on assets - the resources created for compensation of possible damages on "standard assets" of bank;
2.0.6. "target" resources for compensation of damage on assets - the resources created for compensation of possible damages on "non-standard assets" of bank;
2.0.7. hybrid elements of the capital - the financial instruments combining urgent and termless features of shares and debt obligations, including cumulative and non-cumulative termless preferred shares, subordinated debt obligations other or similar securities;
2.0.8. non-cumulative termless preferred aktsiiprivilegirovanny shares in the conditions of which issue, not granting the right to the issuer to make the decision not to issue dividends to owners of shares, and also not granting the right to require receipt of payment for shareholders unpaid earlier to dividends (if in the conditions of issue change of the amount of dividends depending on market conditions and financial condition of bank is provided, similar acts do not belong to non-cumulative termless preferred shares);
2.0.9. cumulative termless preferred aktsiiprivilegirovanny shares under the terms of which issue the dividends which are not paid to their owners constantly accumulate and dividends according to non-cumulative termless preferred and obykny shares are paid before dividends according to these shares, and also granting the right to delay dividend payout to the issuer till certain time;
2.0.10. subordinated debt obligations - the obligations under the terms of issue paid after approach of term of their repayment, unsecured pledge of assets of bank, not returned upon the demand of the owner, not granting the right to the announcement the bankrupt or liquidation of bank if did not make payment according to this obligation (percent or principal debt) before completion of deadline for payment which repayment in case of liquidation of bank is performed after complete satisfaction of requirements of investors and other creditors of bank;
2.0.11. additional resources from share issue (further - surplus of the capital) - the means received in the amount of difference between the selling and nominal value of obykny or preferred shares which arose in case of their placement;
2.0.12. intangible assets - computer programs, copyright, the patent, the rights to use natural resources, licenses, trademarks and trademarks, "know-how", "goodwill" and other assets which are not expressed in physical shape, but being of value;
2.0.13. leverage coefficient - except for 50 (fifty) percent of the size of the mortgage loans refinanced by Open joint stock company the Azerbaijani mortgage fund (further - the Azerbaijani mortgage fund), the relation of the capital of the I level of bank (after the deduction determined in subitem 8.0.1 of these rules) to balance sheet assets and off-balance obligations (except for the part provided pledged on bank accounts by national currency of the Azerbaijan Republic, foreign currency or bank metals);
2.0.14. off-balance obligations - guarantees, the guarantee and similar conditional obligations, credit tools (unexecuted part on credit lines and similar credit obligations) and letters of credit.
2.0.15. the consumer credit credit issued to physical persons for the purposes which are not connected with business or professional activity, and also acquisition or construction of real estate.
3.1. Main objective of the aggregate capital of bank is support of business strategy of bank, ensuring financial stability of bank in case of adverse changes in internal and external environment. The aggregate capital promotes reduction of possible damage which can lead to loss of bank solvency, increases in trust to bank system of investors and potential investors.
3.3. The aggregate capital turns on only financial instruments paid with money.
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