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BUDAPEST, April 4 (Reuters) - The National Bank of Hungary does not want the biggest banks in the country merging, even if there is a push for greater domestic ownership, as it would distort competition, the central bank's director said in a newspaper interview on Friday.
Prime Minister Viktor Orban has said he wants to see more than half of the country's banking sector in Hungarian hands, and the central bank's governor Gyorgy Matolcsy has predicted four foreign lenders may leave the country soon.
Several sources also told Reuters this week that Hungary's largest bank, OTP, was getting closer to clinching a deal to take over from German bank Bayern LB the troubled MKB Bank, which controls about 10 percent of the market.
But National Bank director Marton Nagy told the daily Magyar Hirlap that while there could be a consolidation of the financial market involving domestic banks, savings cooperatives and new entrants, big mergers were not welcome.
He did not name any banks.
Hungary's largest lenders include OTP and MKB, as well as local units of Austria's Raiffeisen and Erste Bank , Italy's Intesa Sanpaolo and Unicredit , Belgium's KBC, and GE Capital.
"We reckon that growth coming from mergers among large banks already present on the domestic market is unhealthy ... Such mergers distort the market because it is oligopolistic," Nagy said.
He added that majority domestic ownership was desirable in the banking sector but that applied to the retail market and corporate banking in different ways. While about 40 percent of the retail banking market is already in domestic hands, that share is less than 30 percent in corporate banking, he said.
Nagy said that savings cooperatives, which are now restructuring, could get involved in mergers and acquisitions in a few years' time.
The government sold its majority stake in the savings bank Takarekbank to a local investment firm last month, after it overhauled the savings bank sector last year and injected more than 100 billion forints of capital into it. (Reporting by Marton Dunai; Editing by Greg Mahlich)