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Hungary's supreme court says will rule on fx loans in autumn
April 10, 2014 / 8:07 AM / in 4 years

Hungary's supreme court says will rule on fx loans in autumn

BUDAPEST, April 10 (Reuters) - Hungary’s supreme court will make a final ruling on troubled foreign-currency loans in the autumn, which will be the final legal decision the government has been waiting for before it takes measures to help borrowers.

Prime Minister Viktor Orban’s government, which was re-elected for the second term in parliamentary elections over the weekend, has promised further measures to resolve the problem of the loans. It said it would wait for courts to clear all legal issues before it takes action.

Some government officials had expected the supreme court, called the Kuria, to rule on the loans around the end of May. But in a reply to Reuters questions late on Wednesday, the court said the ruling was not expected until autumn.

Investors and Hungary’s mostly foreign-owned banks will be looking closely at the decision. The banks fear a new relief scheme for borrowers could inflict further losses on them.

Foreign-currency mortgages were popular in Hungary before the 2008 global crisis, because they let borrowers take advantage of much lower interest rates on the loans. But the forint has weakened since then, causing loan payments to soar and leading to widespread non-payment.

The next stage in the legal maneuvering is a final ruling expected from the European Court of Justice at the end of this month, and then the Kuria ruling in the second half of the year.

Hungary’s supreme 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.

That was a partial reprieve for banks, which 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 Krisztina Than and Marton Dunai; Editing by Larry King)

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