March 6, 2019 / 5:07 AM / a month ago

UPDATE 1-Hungary cbank head sees room for more bank mergers -website

* Market can accommodate five or six big banks -Matolcsy

* Expects upgrade by credit rating agency Moody’s shortly

* Governor does not comment on monetary policy outlook (Adds more comments, detail)

BUDAPEST, March 6 (Reuters) - There is room for further consolidation in the Hungarian bank sector as the market can sustainably accommodate just five or six big players, central bank Governor Gyorgy Matolcsy was quoted as saying in an interview published on Wednesday.

Matolcsy did not comment on the monetary policy outlook. The National Bank of Hungary holds its next rate meeting on March 26, with market expectations growing that the bank may start normalising its loose monetary policy due to rising inflation.

“In an international comparison, the domestic bank system operates with fairly high costs and is expensive,” Matolcsy told the news website novekedes.hu.

“One form of boosting efficiency is consolidation. Therefore, I see scope for certain domestic institutions to merge in the future,” he added.

Major lenders in Hungary include domestic OTP Bank , Belgian KBC’s local unit K&H, Austrian Raiffeisen and Erste as well as Italian UniCredit and Intesa SanPaolo.

In January, Prime Minister Viktor Orban’s government launched the sale process of state-owned Budapest Bank it bought from the financial arm of General Electric in 2015 for $700 million.

Matolcsy, reappointed for a second six-year term at the helm of the National Bank of Hungary this month, also said he expected an upgrade by credit rating agency Moody’s in the near future.

Standard & Poor’s and Fitch both raised Hungary’s credit rating last month.

“I expect a further upgrade by Moody’s as well, because the most important economic indicators they monitor, such as GDP growth or state debt, as well as its structure, have evolved more favourably than expected last year,” Matolcsy said.

Hungary’s economy grew 4.9 percent in 2018. (Reporting by Gergely Szakacs; Editing by Clarence Fernandez)

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