The Central Bank of the Republic of Azerbaijan has issued updated criteria for assessing and designating systemically important banks, revising the indicators and methodology used to identify institutions whose financial distress could activate systemic risks. Approved by the central bank’s Board on 19 March 2025 and effective from 9 April 2025 after state registration, the revised criteria recalibrate indicator weights, add new indicators and refine the calculation methodology. Unlike the previous approach, identification is no longer driven primarily by asset size, with the size measure now incorporating deposit portfolio volume and additional “substitutability” indicators covering the number of individuals and legal entities with deposit accounts, unique customer count, and the numbers of ATMs, POS terminals served and branches. The central bank also noted that a systemically important designation is not a sign of superior financial strength, but it entails heightened responsibility and additional regulatory requirements such as extra total and Tier 1 capital adequacy requirements and a differentiated leverage ratio.
Central Bank of the Republic of Azerbaijan 2025-04-15
Central Bank of the Republic of Azerbaijan brings revised systemically important bank criteria into force with new deposit and substitutability indicators
The Central Bank of the Republic of Azerbaijan has updated criteria for designating systemically important banks, revising indicators to include deposit portfolio volume and substitutability factors. Effective from 9 April 2025, the criteria shift focus from asset size to broader measures, including customer and service infrastructure metrics. Designation entails additional regulatory requirements, including higher capital adequacy and leverage ratios.