BAKU, Azerbaijan, October 29. The Central Bank
of Azerbaijan (CBA) is currently targeting returns of 0.3–0.5% from
securities lending operations, the governor of the Central Bank of
Azerbaijan (CBA) Taleh Kazimov said, Trend's correspondent reports from the
event.
He made the remarks at a press conference on Thursday following
a meeting on the parameters of the interest rate corridor.
According to him, the primary purpose of these operations is not
to generate substantial income, but to cover securities custody
costs and earn additional returns.
“Our goal is not to maximize income. The aim is to cover the
costs associated with holding these assets and generate some
additional revenue. We are not talking about substantial returns
here. Globally, yields range from 0.3 to 0.4–0.5%. Depending on the
securities involved, this figure can rise to a maximum of 1%,”
Kazimov said.
The CBA governor noted that the operations are currently planned
to continue at a volume of 1 billion manat ($588.2 million).
“We will continue with 1 billion manat ($588.2 million) for now.
We invest in securities and earn income from repo transactions.
However, there are custody costs associated with holding these
securities. In most cases, this mechanism is used to earn an
additional spread of 0.3–0.5% on top of the interest income we
receive. This is achieved through securities lending, and the
returns also depend on the volume of securities involved,” Kazimov
said.
He added that the mechanism is one of the instruments the
Central Bank uses to manage its assets and reserves.
“Authorization has been granted to use the custody mechanism for
assets worth 1 billion manat ($588.2 million),” he said.
