Kúria issues guidelines on FX loans

As the Kúria issues a ruling on foreign currency loans, columnists express skepticism on the government’s ability to save debtors.

Those who were expecting a miracle were disappointed by the Supreme Court, Anna Szabó writes in Magyar Nemzet. Although the institution issued unified legal guidelines for lower courts on how to settle litigation between forex debtors and their banks, the commentator believes that the Supreme Court (Kúria) did not leave sufficient margin for the government to resolve the issue satisfactorily. Thus prolonged negotiations between the cabinet and the banks, as well as individual litigation proceedings, will continue.

Last week, in a landmark decision the Kúria ruled in favor of FX debtors, arguing that the banks should not have charged their clients the exchange rate spread (see BudaPost, June 9). The unified guideline for lower courts includes some other principles as well, including severe limitations on the right to modify contracts unilaterally. The court upheld its previous ruling, stating that forex loans are a legal practice, if proper information is given to the borrowers about the risks they are taking. Following the Kúria’s ruling the government pledged to create a uniform legal framework for tackling the issue of loans denominated in foreign currencies.

The ball is now in the government’s court, Bence Kriván writes in Népszabadság. The Orbán-cabinet will try ensure its victory in the autumn’s local elections by promising bold and spectacular solutions for this problem, he expects. However, the commentator would not stake much on the likelihood of those vows being honoured.

Even if the government were to manage to create a legal framework in accordance with the principles issued by the Kúria, it would still not address the principal concerns of FX debtors, Noémi Benedek suggests in Népszava. Such a complex social matter cannot be handled from the mere perspective of the law, she writes. Any legal solution can only diminish the monthly installments by a few percentage points, while most borrowers are not even able to pay such smaller sums. If the government really wants to help these citizens, Benedek advises, it should work on a reliable economic policy, a strong Hungarian currency and some urgent measures for the debtors in the most trouble.

Tags: forex debt, Kúria