Citibanamex IPO Closes Door to Buyers

Citigroup announced that it would divest its unit in Mexico (Citibanamex) through an Initial Public Offering (IPO), ruling out an acquisition by Grupo México and any other interested parties. The IPO is scheduled for 2025. In response to the news, Mexican President Andrés Manuel López Obrador reiterated his intention for the government to acquire the bank.

Almost a year and a half after Citigroup announced it would sell Citibanamex, the US financial group announced that it would launch an IPO in the stock market. With this announcement, German Larrea's Grupo Mexico and any other possible interested parties are ruled out as direct buyers, although they could participate in the IPO. "After careful consideration, we concluded that the optimal path to maximize the value of Citibanamex for our shareholders and advance our goal of simplifying our business is to pivot from our dual-track approach to focus solely on an IPO," says Jane Fraser, CEO, Citigroup.

The uncertainty affecting the US banking system, which followed the Silicon Valley bank crisis, could have influenced Citigroup’s decision, leading it to reverse its sale position immediately. 

After the announcement, President López Obrador reiterated his intention for the Mexican government to acquire the bank. "We were informed yesterday that negotiations with Grupo Mexico were suspended because they are asking for more guarantees,” says López Obrador. He adds that the acquisition of the bank " is an opportunity" and the government would be willing to ask for debt to participate in the operation. 

"We do need a bank. Suppose they talked about US$7 billion and must pay US$2 billion in taxes for the public treasury. In that case, US$5 billion are left. [it is possible to participate through] a public-private partnership, where the government contributes another amount. We can have up to US$3 billion and sell US$2 billion in shares to Mexicans," said López Obrador in a morning conference.

Some concerns regarding the sale of Citibanamex had pertained to doubts whether it would affect the bank's clients, but the bank says that their operations will not be affected. "The bank's daily operations continue and the instruction is that no customer will be affected; they will continue to be served," says Alberto Gómez Alcalá, Director of Economic Studies and Institutional Affairs, Citibanamex, in a video conference on Tuesday. Citibanamex has a network of 1,300 branches, 9,063 ATMs and more than 12.7 million consumer banking customers.