Central Bank of Azerbaijan to focus on bolstering banks' resilience to internal, external risks in 2027-2028

BAKU. March 11 (Interfax) - The Central Bank of Azerbaijan has approved a banking oversight strategy for 2027-2028, according to the regulator's website.

The strategy envisages implementing oversight priorities across the most pressing risk areas for banks over the next two years, namely by bolstering their resilience to macroeconomic threats, improving the business model sustainability and profitability management, enhancing operational resilience, updating risk management systems, and strengthening corporate governance, risk culture, and consumer protection in banks.

"Furthermore, the banking supervision strategy envisages developing the Central Bank's regulatory framework to support these priorities by updating regulations to improve risk management and stress testing systems in banks; implementing requirements for the Internal Capital Adequacy Assessment Process (ICAAP) and Internal Liquidity Adequacy Assessment Process (ILAAP) for banks to improve compliance with Basel III standards; and integrating climate and environmental, social and governance (ESG) risks into the regulatory and oversight framework," the CBA said.

The regulator said that the Central Bank's measures to implement risk-based oversight also contribute to ensuring the long-term sustainable development of the banking sector and bolstering its resilience to potential shocks.