Economy News 15 October 2026 14:30 (UTC +04:00)
Photo: Trend News Agency
BAKU, Azerbaijan, October 15. The banking system in Azerbaijan is financially resilient, Executive Director of the Central Bank of Azerbaijan (CBA), Shahin Mahmudzade, said at a press conference dedicated to the presentation of the Financial Stability Report in Baku on Thursday, Trend's correspondent reports from the event.
According to him, the application of an additional capital buffer requirement for systemically important banks in Azerbaijan serves to strengthen the resilience of these banks against financial shocks, but this requirement doesn’t imply that small and medium-sized banks are riskier or more vulnerable.
He noted that the establishment of an additional capital buffer for systemically important banks is part of the regulatory framework, aimed at ensuring the creation of extra financial reserves to cover risks these banks might face.
"The purpose of the additional capital buffer is to reflect the specific needs of systemically important banks. The existence of this requirement helps make these banks less vulnerable. However, this doesn’t imply that smaller banks are more vulnerable or prone to problems," Mahmudzade pointed out.
According to him, stress tests are conducted to assess the financial condition of banks and their resilience to potential shocks. These analyses allow determine the potential impact on the financial indicators of individual banks, as well as the overall resilience of the banking system.
The CBA executive also noted that the results of the stress tests are expected to be released early next year. These results will allow for an assessment of how the banks' capital indicators might change under various scenarios.
"Our previous reports also highlighted that the average capital adequacy ratio of the banking system stands at around 17–18%, while under stress scenarios, it falls to approximately 14%. These indicators are significant for assessing the overall resilience of the banking system," he remarked.
Mahmudzade emphasized that the emergence of financial difficulties in individual banks does not automatically mean a threat to financial stability as a whole.
"Certain problems may arise in individual banks. This may be caused by factors related to various business decisions, shareholder activities and risk management. Our main goal is to prevent systemic problems and maintain financial stability rather than problems that may arise in individual banks," the executive noted.
He added that the introduction of an additional capital buffer for systemically important banks corresponds to the role of those financial institutions in the system and the scale of potential risks. The existence of this requirement doesn’t give reason to conclude that small and medium-sized banks are more problematic.
According to Mahmudzade, CBA regularly monitors possible risks in the banking sector and continues appropriate regulatory and control measures to protect financial stability.