National Bank of Bulgaria reviews OFAC sanctions on Rosneft and Lukoil and reports no direct credit risk to the Bulgarian banking system

The National Bank of Bulgaria published an update on its review of the potential effects on the domestic banking system of US Treasury Office of Foreign Assets Control (OFAC) restrictive measures under Executive Order 14024 targeting Russia’s Rosneft and Lukoil, their subsidiaries, and entities in which they directly or indirectly own 50% or more. It concluded that, at a system-wide level, no direct credit risk has been identified that would affect the stability of Bulgaria’s banking system. The central bank noted that some potentially affected legal entities in Bulgaria are significant economic actors whose financial flows are serviced by the banking sector, and highlighted that OFAC has provided a wind-down period via a general licence for certain activities and existing contractual relationships. Credit institutions will independently decide how to manage contractual relationships with potentially affected clients, within the applicable European and national legal framework including sanctions and anti-money laundering rules, based on risk assessments under the Law on Measures against Money Laundering and taking into account the possibility of secondary sanctions for breaches of the OFAC regime. The National Bank of Bulgaria is coordinating with the Ministry of Finance and other competent national authorities on the impact assessment and any necessary measures, and will continue monitoring developments and update the public if further actions or clarifications are required.