site.btaCentral Bank Reviews, Analyses Potential Impact of U.S. Sanctions Against Russian Oil Companies on Bulgaria’s Banking System

The Bulgarian National Bank (BNB) announced on Thursday that it is conducting a review and analysis of the potential consequences for the country’s banking system stemming from the restrictive measures imposed by the Office of Foreign Assets Control (OFAC) at the U.S. Department of the Treasury against Russian energy companies Rosneft, Lukoil, their subsidiaries, and entities in which these companies directly or indirectly hold 50% or more of the capital.

The BNB stated that, at a systemic level, no direct credit risk has been identified that could affect the stability of Bulgaria’s banking system.

From an economic standpoint, the entities in Bulgaria potentially affected by the sanctions are among the country’s significant business operators, whose financial flows are serviced by the banking sector, the statement reads.

According to OFAC’s announced measures, certain activities and existing contractual relationships are subject to a transitional (wind-down) period, regulated by a general license, which allows the settlement of current obligations within a specified timeframe, the BNB clarified.

In this context, and in strict compliance with the applicable European and national legal frameworks—including provisions related to international sanctions and anti-money laundering measures—as well as with their internal rules and procedures, credit institutions will independently make decisions regarding their contractual relationships with potentially affected clients, the statement said.

This will be done based on an assessment of the risks associated with establishing or maintaining business relationships, in accordance with the requirements of the Anti-Money Laundering Measures Act, and taking into account the possibility of secondary sanctions being applied to persons or institutions that violate OFAC regulations.

The central bank also said it is in tight coordination with the Ministry of Finance and other competent national authorities in assessing the impact of the sanctions and in taking appropriate measures where necessary.

The BNB continues to monitor the situation closely, maintaining active communication with national and international institutions, and will inform the public if circumstances arise that require additional actions or clarifications, the statement added.

Earlier on Thursday it was announced that, due to the war in Ukraine, the United States has imposed sanctions on Russia’s two largest oil companies—Rosneft and Lukoil—and is prepared to take further action.

The sanctions imposed by the United States on Lukoil will not affect the operations of the refinery in Burgas, and Bulgaria has one month to decide how to proceed, Prime Minister Rosen Zhelyazkov said upon arriving to attend the European Council meeting in Brussels.