Citigroup Leaves Mexican Retail Banking; Banamex is up for GrabsBy Sofía Hanna | Wed, 01/12/2022 - 14:01
Citigroup is leaving its consumer banking operations in Mexico and will sell its local brand, Citybanamex. The Mexican government claims no interest in buying it but some private investors are reportedly considering the acquisition. Some claim that this could be an opportunity to further diversify banking in Mexico and reduce its foreign share.
On Jan. 11, Citibank announced that it intends to exit the operations of Citibanamex as part of its strategic restructuring but will continue to operate a locally licensed banking business in Mexico through its global Institutional Clients Group. “Mexico is a priority market for Citi—that will not change,” said Citi’s CEO, Jane Fraser. “We expect Mexico to be a major recipient of global investment and trade flows in the years ahead, and we are confident about the country’s trajectory. Citi is uniquely positioned to support cross-border capital markets activity and trade flows in and out of Mexico for our institutional clients and we will continue to make material investments in our institutional operations and market-leading hub there.” The timing of Citigroup’s exit could open the door to sales or stock market operations but this is yet to be determined.
Once Citigroup’s departure was made public, the Mexican government stated that Citigroup’s decision to close its operations in Mexico is not bad for the country. “The country’s economy is doing well and it is in full recovery. It is simply the exercise of a right that a group of investors has, in this case, to rethink their activities in the country, their investment. They are the third-largest bank entity in Mexico, the second by number of branches, and they had profits of over US$1.5 billion last year,” said Adán Augusto López, Minister of the Interior (SEGOB), during the morning press conference. He added that SEGOB has no interest in buying Citibanamex.
The sale of the banking group could become an opportunity for diversification in Mexican banking. According to the National Banking and Securities Commission (CNBV), of the 52 multiple banking institutions operating in the country, four concentrates 61.28 percent of Mexican assets. These four groups are BBVA with 22.74 percent, Santander with 15.05 percent, Citibanamex with 12.24 percent and Banorte with 11.25 percent.
As the third-largest bank in the country, this could be an attractive acquisition but not necessarily a straightforward one. “The purchase of Banamex requires an interested party with great economic power but to avoid greater concentration in the sector, it will probably not be given to one of the banking giants,” said Jorge Sánchez Tello, Director of Applied Research, Fundef, to El CEO. A merger with another local bank is also possible but would imply a greater contraction of the offer.