BUDAPEST, July 16 (Reuters) - Hungary is considering legislation that could modify the conditions of private foreign currency loans wholesale to help indebted households, Deputy Prime Minister Tibor Navracsics said on Tuesday.
Many Hungarians took out loans denominated in Swiss francs before the 2008 global crisis and are now unable to repay them as the forint has fallen and the franc has surged.
Hungary's highest court, the Kuria, this month backed OTP Bank in a test case over a foreign currency loan contract disputed by one of the bank's debtors, ruling that the contract was valid while also forcing OTP to repay some of the exchange rate fees it had charged its client.
The decision disappointed many borrowers, some of whom protested outside the court building.
Navracsics said pressure was mounting on Prime Minister Viktor Orban's government to seek some kind of solution.
'We are now looking at possibilities within the constitutional framework - whether there is a way to modify the conditions of foreign currency loans with a general effect, with a law or legislation in the autumn session (of parliament),' Navracsics told the private channel HirTV.
'This could happen if some circumstance that was valid at the time the contract was signed has changed fundamentally in a way that could not be foreseen, and therefore the borrower cannot be blamed for not being able to fulfil it.'
Navracsics made clear that the new legislation, which would first be discussed by the government, would apply to existing loan contracts as well as future ones. He did not provide more details.
Hungary's government has already implemented various schemes to help private borrowers with foreign currency loans.
A scheme that allowed borrowers to repay their debts in a lump sum at well below market exchange rates forced banks to swallow huge losses.
Last month, before the court's ruling, Hungary's financial watchdog, PSZAF, advised it against making a blanket decision favouring foreign-currency debtors suing their banks, saying this could undermine the financial system.
(Reporting by Krisztina Than; Editing by Kevin Liffey) Keywords: HUNGARY FXLOANS/GOVERNMENT
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