BAKU, Azerbaijan - Azerbaijan’s parliament has advanced a package that would expand Central Bank supervision of financial groups and create a legal framework for securitization.
The amendments to the Central Bank law and anti-money-laundering legislation passed a first reading on Oct. 16. They would introduce consolidated supervision of groups that include banks, life-insurance companies offering savings products, reinsurers and insurance intermediaries, investment companies, investment funds and their managers, as well as representative offices of foreign investment funds, according to APA.
Lawmakers said the change reflects recommendations 26 and 27 of the Financial Action Task Force cited in Azerbaijan’s fifth-round MONEYVAL evaluation. The rules would allow the Central Bank to assess risks across a financial group rather than examining each company only on a stand-alone basis.
A separate first-reading securities bill would permit a special-purpose company to issue bonds whose payments are backed by cash flows from a pool of assigned assets, APA reported in a second report.
Eligible assets could include receivables from loans, financial leasing and factoring, as well as bonds issued by companies whose securities are not publicly traded. The Central Bank could identify additional asset classes.
Receivables from bankrupt debtors, nonperiodic claims and encumbered assets generally could not be transferred into a securitization pool, although the draft provides a limited exception for some concessional business loans. Once entered in the relevant register, the assets would be treated as pledged to bondholders.
Both measures remain draft legislation after their first readings. The votes do not mean that the new supervisory regime is in force or that any securitization issuance has begun.