European Court deems guarantees of subsidized home loans illegal state aid

Issues

The European Court of Justice ruled today that guarantees by the state of Hungary of subsidized home loans are to be deemed as illegal state aid, according to Hungarian news agency MTI.

The case concerned guarantees on subsidized home loans to large and disadvantaged families under a system introduced by the government in 2001, prior to Hungary joining the European Union. The case was brought by OTP Bank, Hungaryʼs largest commercial lender, against the state after it terminated the payment of guarantees on the grounds that it was illegal state aid according to EU rules.

The case sought to resolve whether the guarantees were compatible with internal market rules and, if they were incompatible, what remedies were available for any damage suffered by the concerned parties.

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