Appeals court confirms first-instance loan defense ruling against MKB Bank

Issues

The Budapest Municipal Court of Appeals confirmed in a non-appealable ruling on Wednesday a first-instance ruling rejecting MKB Bank's defense of changes it made to retail loan contracts, Hungarian news agency MTI reported today. The defendant in the case, the state of Hungary, bought MKB from Germany's BayernLB in a transaction closed late September.

Under legislation approved in the summer, lenders must compensate retail clients for making unilateral changes to contracts unless they can successfully defend the practice in court. Not a single defense has been entirely successful, although the practice of modifying contracts was ruled fair for some lenders but only for limited periods. Some cases were also referred to the Constitutional Court on the grounds that the right to due process was violated.

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