June 16, 2014 / 11:27 AM / 4 years ago

Hungary court rules some FX loans could be unfair

BUDAPEST, June 16 (Reuters) - Hungary’s Supreme Court ruled on Monday that the exchange rate risk borrowers took on when getting a foreign currency loan could be considered unfair only if borrowers could not realistically assess the scale of possible shifts in market rates.

In a landmark ruling that Prime Minister Viktor Orban’s government plans to use as a legal template to get rid of the toxic loans, the court also said the practice of banks applying different exchange rates when disbursing the loan and when repayments were due was unfair.

It said unilateral contract changes by banks were acceptable only if they were in line with a detailed set of conditions laid out in its ruling. The ruling does not apply retroactively but serves as a guidance to courts in pending cases. (Reporting by Gergely Szakacs; Editing by Alison Williams)

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