BAKU, Azerbaijan, March 2. S&P Global Ratings views
favorably the track record of Azerbaijan Central Bank’s new
management over past 4 years, Trend reports.


“We view favorably the track record of the CBA's new management
over the past four years. All banks comply with Corporate
Governance Standards, which were implemented in 2024, having
restructured Supervisory Board Committees and appointing
independent Supervisory Board members. To proactively address risks
from rapid credit growth over the past three years, the regulators
activated a countercyclical capital buffer of 0.5% from March 2025.
In addition, they tightened regulation for consumer loans and
credit cards, the most rapidly growing segment. The banking system
remained stable over 2024-2025.”


S&P believes that the effective implementation of the
initiatives to modernize the banking regulation and supervision in
Azerbaijan should bring it closer to international best
practice.


“These initiatives became most pronounced over the past three
years under the Financial Sector Development Strategy for
2024-2026, under the leadership of the Governor of the Central Bank
Taleh Kazimov. We note that the scope of the regulatory initiatives
has considerably expanded. The main achievements over 2024-2025
were: corporate governance standard for banks, a regulation
limiting related party transactions, regulation on liquidity risk
management aligned with Basel III requirements, new regulation on
management of operational and market risks, and strengthened
regulation on banks’ prudential reporting,” reads the latest report
by S&P.







The rating agency notes that in 2026, the regulators plan to
roll out risk-based supervision to all banks, implement IFRS9
reporting, manage the banking sector transition to Basel III
capital adequacy framework, strengthen requirements for banks’
stress testing and long-term liquidity management, introduce
Internal Capital Adequacy Assessment Process and Internal Liquidity
Adequacy Assessment Process requirements, and develop consolidated
approach to supervision, and resolution framework.


“We believe that effective implementation of these initiatives
should further strengthen regulation and supervision for banks in
Azerbaijan. The regulator is putting more emphasis on addressing
newer and emerging risks. To increase awareness of environmental,
social and governance risks in the banking sector, the regulator
implemented its 2023-2026 Sustainable Finance Roadmap. The CBA
continues to strengthen the cyber resilience of the banking sector
through a risk-based supervisory framework, sector-wide
coordination, and enhanced regulatory requirements. The Committee
of Experts on the Evaluation of Anti-Money Laundering Measures and
the Financing of Terrorism stresses considerable improvements in
the anti-money laundering /countering the financing of terrorism
(AML/CFT) legal framework in Azerbaijan over the past several
years. However, certain technical gaps in relation to the money
laundering offence and related sanctions remain. The authorities
implemented the National Action Plan in relation to AML/CFT for
2023-2025.”