Hungary passes new law on loans that could hit banks

BUDAPEST, July 4 Fri Jul 4, 2014 7:21am EDT

BUDAPEST, July 4 (Reuters) - Hungary's parliament has approved legislation on Friday to cut bank charges on foreign currency and forint-denominated loans retroactively, which could cost the country's banks billions of euros in compensation to borrowers.

The law is the first step of a relief scheme for Hungarians struggling to manage the foreign currency loans that were once popular for their low interest rates prior to the 2008 crisis, but turned sour when the forint weakened.

Settlement of the compensation to borrowers is planned for the autumn under a second bill.

(Reporting by Krisztina Than and Sandor Peto)

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