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Portuguese banking consolidation likely soon, says central bank governor

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By Sergio Goncalves

LISBON, June 19 (Reuters) -Portugal's banking sector will likely undergo further consolidation soon as the lenders are well capitalized and attracting greater interest from investors, Bank of Portugal Governor Mario Centeno said on Wednesday.

"There have been movements in this direction over the last few years, some have materialised, others will materialise soon and others, certainly, would be under analysis, and I cannot comment" on those, he told a parliamentary committee.

Centeno said while a prudential and competition analysis needs to be performed at all times, the "supervisor (central bank) should have little interference in the market mechanisms of merger and acquisition moves".

Although the top five Portuguese banks control more than 80% of the banking assets, analysts see room for further consolidation as a means to improve competitiveness.

"In the broader European context, Portuguese banks ... can be part of more global (consolidation) moves that bring some additional resilience to the market," Centeno said, highlighting strong capital ratios of Portuguese banks compared to a few years ago and "very low" levels of loan defaults.

Analysts have said Portugal's fourth largest bank, Novo Banco, which is controlled by U.S. private equity fund Lone Star, could be a potential candidate for an M&A operation, if its plan for an initial public offering fails.

Meanwhile, on Monday, state-owned Caixa Geral de Depositos (CGD) CEO told a newspaper that the country's largest bank was considering "all the hypotheses" to buy another lender to preserve its market leadership in the face of expanding foreign banks, particularly from Portugal's larger neighbour Spain.

The other top banks in the country include Millennium bcp BCP.LS, Santander Portugal SAN.MC, which is owned by Spanish giant Santander, and BPI, owned by Spain's CaixaBank CABK.MC.

Reporting by Sergio Goncalves; editing by Andrei Khalip and Shinjini Ganguli


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