* Ruling on exchange rate spread applied in FX loans
* Hungarian court could make own decision later in year
* Government planning to phase out FX mortgages
(Adds Kuria statement about timing of decisions)
BUDAPEST, April 30 Hungary's top national court
said on Wednesday it may rule before its summer break in a
landmark case that could help define how the government solves
the stubborn problem of foreign-currency loans.
In a case dealing with those loans, the European Court of
Justice ruled earlier on Wednesday that Hungary can amend the
terms of a contract for a foreign currency loan if it is deemed
unfair. That referred the case back to the top court in Hungary,
called the Kuria.
Foreign currency loans, mainly in the safe-haven Swiss
franc, were popular in Hungary before the 2008 financial crisis
for the low interest rates they offered. They turned sour as the
Hungarian forint weakened, making the loans much more expensive
to repay. Many borrowers were pushed into default.
Hungarian borrowers sued OTP Bank, complaining
that they got a Swiss franc loan at the bank's buying exchange
rate, but had to pay instalments and other costs at the selling
The Kuria had sought guidance in relation to the lawsuit
about the fairness of the so-called exchange rate spread in such
loans - the difference between the rate at which the loan was
disbursed and at which instalments and costs are paid.
Kuria press officials told national news agency MTI that the
court could make a ruling of its own in the case before its
summer recess, which starts on July 15.
In a subsequent final ruling, most likely after the recess
ends on Aug. 20, the Kuria will amend a broad-based legal
opinion that it formed about the issue last year, it said.
Prime Minister Viktor Orban's government, which is planning
a new relief scheme for forex borrowers, has said that it would
wait for that final ruling before it decides how to phase out
billions of euros worth of such mortgages.
The European Court of Justice also said it was up to the
Hungarian court to determine whether the terms of the total cost
of the foreign currency loans were clear enough to borrowers.
The Hungarian court has already ruled on the main legal
issue, finding that lenders were not to blame when borrowers
lost out because the exchange rate changed. But it referred
certain issues to the European court.
At 1001 GMT, the forint traded at 307.59 per
euro, slightly stronger than morning levels. Shares in OTP Bank,
central Europe's largest independent lender, were down 1
percent, off session lows hit earlier.
"My feeling is that the ball is back in Hungary's court, the
big questions have yet to be decided, so uncertainty will
persist," analyst Gergely Szabo Forian at Pioneer Investments,
Hungarian banks are largely foreign-owned. They include
units of Belgium's KBC, Austria's Raiffeisen Bank
, Erste Bank and Italy's UniCredit.
Banks have already lost more than a billion euros in a previous,
2011 relief scheme.
(Reporting by the Budapest bureau. Editing by Larry King)