Central Bank of Azerbaijan extends 100% LCR requirement for all banks to Dec 1, 2027
BAKU. July 8 (Interfax) - The Central Bank of Azerbaijan (CBA) has approved new requirements regarding the liquidity coverage ratio (LCR) in the country's banks, to enter into force on August 1, 2025, the bank said on its website.
For Azerbaijan's systemically important banks [of which there are currently five], the requirements stipulate a step-by-step increase in the LCR, overall and in the national currency, from 50% to 100% by July 1, 2027, while all other banks should increase their LCR from 40% to 100% by December 1, 2027.
"These changes are aimed at stepping up supervision over banks' liquidity, increasing their stability and retaining capacities for funding the real economy," the bank said in the statement.
The CBA said that it had expanded the list of bank assets which are classed as highly liquid. For example, the list now includes precious metals, securities and state-guaranteed financial institutions, overnight deposits and short-term funds placed with the CBA.
The LCR in systemically important banks in Azerbaijan previously needed to be at 100% from June 1, 2025, and at least 90% in all other banks. It must now be at 100% for all banks by December 1, 2025.
Until the LCR for the banking system reaches 100%, the CBA will continue to apply the instant liquidity ratio.
Azerbaijan's banking sector had an instant liquidity ratio of 52% at the end of 2024, which exceeds the minimum requirement by 22 percentage points. In 2024, the liquid assets of the country's banks increased by 1.1 billion manat or 8%, reaching 14.2 billion manat. Overall, liquid funds accounted for 27% of the banking sector's assets at the end of 2024, which provides an adequate buffer to respond to potential liquidity shocks.
At the end of 2024, 56% of banks' liquid funds were in national currency, versus 52% at the end of 2023, while 44% were in foreign currency. A total of 46.6% of banks' liquid funds consisted of securities.
Azerbaijan has 22 licensed banks.
