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Court rules no compensation in savings coop suit

Issues

The Budapest Municipal Court on Monday ruled that compensation could not be paid for the legally mandated integration of the country's savings cooperatives.

The suit was brought by the National Savings Cooperative Association (OTSZ) and a private individual against the Hungarian state, postal company Magyar Posta, TakarékBank, the Hungarian Development Bank (MFB), the National Bank of Hungary (MNB) and savings cooperatives integrator SZHISZ.

A counsel for the plaintiff said earlier that in spite of the Constitutional Court's refusal to annul the law on the integration, as requested by the Municipal Court's judges, the integration is still "an act of expropriation cloaked in the form of law". In its ruling on Monday, the court noted that the Constitutional Court had annulled some details of the law in a ruling in July, but did not question the legal validity of the law as a whole.

The Municipal Court's ruling may be appealed. The government-mandated integration aimed to create synergy and help savings cooperatives meet stricter European Union capital adequacy requirements.

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