Court rejects Merkantil Bank's contract defense

Issues

The Municipal Court of Budapest rejected Merkantil Bank's defense of changes it made to contracts with borrowers in an appealable ruling on Wednesday. Merkantil Bank is the leasing unit of OTP Bank, Hungary's biggest commercial lender.

The judge said the lender's general contract conditions allowing unilateral changes failed to conform to the principle of transparency.

Under borrowers' relief legislation approved in the summer, lenders must refund clients for making unilateral changes to loan contracts unless they can prove in court that the practice was fair.

Merkantil Bank is one of many lenders defending the contract changes in court. Of the dozens of rulings the court has made in the cases so far, just three have been in favour of banks, albeit only partially. In cases involving four lenders, the matter was referred to the Constitutional Court.

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