The Central Bank of Azerbaijan (CBA) plans to bring capital requirements in line with Basel III standards from 1 January 2027. Atakhan Hasanov, director of its Financial Stability Department, spoke at a press conference on the regulator's semi-annual Financial Stability Report. He said total capital in the banking sector has reached 7 billion manats, which is 600 million manats more than on 1 July 2025.
According to the CBA, banks will be required to comply fully with the new requirements from 1 January 2027. The sector's capital adequacy ratio was 17.7%. Hasanov said the updated system of capital requirements will further strengthen the financial stability of the banking sector.
CAPITAL SUPPORTS BOTH RESILIENCE AND GROWTH
The CBA describes a dual trend in the capital position of the Azerbaijani banking sector in the first half of this year. Hasanov added that capital allowed banks both to increase their ability to cover potential losses and to support market expansion.
The current capital position also leaves room for expansion. It allows the sector to support an additional increase in risk-weighted assets of 20.1 billion manats, which is just over $11.8 billion.
BUFFERS AND THE BASEL MINIMUMS
The central bank has had a 0.5% countercyclical capital buffer in place since March 2025 and is now adding a 2.5% capital conservation buffer on top of it. The Basel framework sets minimum requirements of 4.5% for common equity tier 1 (CET1), 6% for Tier 1 and 8% for total capital.
Basel standards constitute minimum requirements, and jurisdictions may decide to apply a more conservative treatment. The post-crisis regulatory reforms were endorsed on 7 December 2017 by the Group of Central Bank Governors and Heads of Supervision, the oversight body of the Basel Committee.
CAPITAL RATIO AND THE OUTLOOK TO 2028
The sector's 17.7% capital adequacy ratio in the first half of this year compares with 17.4% for Azerbaijan's banking system in 2025.