Hungary court rejects first lawsuit over loan refund plan

BUDAPEST Fri Aug 22, 2014 8:37am EDT

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BUDAPEST Aug 22 (Reuters) - Hungary's Budapest Municipal Court on Friday rejected a lawsuit brought by a small savings bank to challenge a new law mandating refunds to loan clients, news agency MTI reported.

The refunds, which the government says are to compensate clients for past unfair lending practices, could cost the bank sector in Hungary up to 900 billion forints ($3.81 billion), the central bank has estimated.

The bank, Kethely es Videke Savings and Loan Cooperative, is the first of dozens of banks which have brought such cases to court before a deadline to file such challenges expires on Aug. 25. The bank can appeal the ruling.

All of the country's biggest banks have filed individual challenges to the law, the court said this week. The first major bank to challenge the law will be the local unit of Belgian lender KBC, K&H Bank, whose hearing is scheduled for Monday.

Hungary's largest lenders include Austria's Erste and Raiffeisen, Italy's Intesa Sanpaolo and UniCredit, as well as OTP Bank, Hungary's home-grown market leader.

(1 US dollar = 236.2200 Hungarian forint) (Reporting by Marton Dunai and Sandor Peto; editing by Jason Neely)

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