Four major banks currently operating on Hungarian market could wind up their activities within the next 18 months, MTI news agency reported, citing central bank governor Gyorgy Matolcsy as saying in an interview for local Hir TV. According to the governor, these financial institutions are part of the top eight banks in Hungary , which account for 70% of the total stock of loans. The central banker believes that is case of withdrawals small and medium-sized Hungarian banks could step up. He sees a possibility for the establishment of new Hungarian banks and the entry of new foreign players, possibly from Asia . Last week Fitch Ratings said it kept a negative outlook on Hungary's banking sector citing high non-performing loans, muted credit demand, a sluggish economy and subdued performance. The ratings agency also said it expects M&A activity on the Hungarian banking sector. In its assessment of Austrian banks, published on December 10 , Fitch noted it expects Austrian banks to consider a complete exit from Hungary depending on political developments in 2014 and associated costs for the banking sector. According to the rating agency, the Austrian lenders have already significantly scaled down their operations in Hungary , thereby limiting their potential exposure. Fitch believes that political risk regarding FX loans remains high in Hungary . The unorthodox policy measures such as the government's proposal to convert FX mortgages into forint mortgages at a pre-defined exchange rate or to shorten the maturity of mortgage loans could have a negative impact on the banking sector. Currently, two of the three Austrian banks operating in Hungary , Erste and Raiffeisen are part of the top 8 group of credit institutions on the local market, central bank data shows. This group comprises also Hungary's OTP, Italian owned CIB Bank and UniCredit Bank , Belgian owned K&H, German-controlled MKB Bank and US-owned Budapest Bank .
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