Citigroup Leaves Mexico; PEMEX Completes RefinancingBy Emilio Aristegui | Thu, 01/13/2022 - 16:20
Citigroup leaves consumer banking operations in Mexico, while PEMEX completes a major financing strategy led by the SHCP. Meanwhile, Bloomberg assured that Mexico’s external financing strategy adds security for investors.
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Victor Islas, Country Manager for ClearSale Mexico, explained that fraud prevention is what truly differentiates companies. Islas said that small and medium companies decline 50 percent of transactions because of fraud prevention, while larger companies only reject 14 percent. According to Islas, a fraud prevention model must be dynamic, while giving every single transaction its own value and treatment.
“Our model is very different from the majority of the earned-wage models in both the US or across Latin America. Most of those models focus on charging employees every time they want to withdraw funds from their earned wages. We believe that it is a faulty model because it basically charges the people you want to help,” said Diego Villareal, CEO at Castor.
US financial, software, data and media company Bloomberg reported that Mexico’s coverage of its external finances earlier this year has boosted investor confidence in the country. The strategy by the Ministry of Finance and Public Credit (SHCP) provided security for investors with the issuance of a 12-year bond that will pay a 3.5 percent coupon and a 30-year bond that will pay a 4.4 percent coupon. Citigroup also highlighted that those Mexican bonds were the favorite amongst emerging economies in the international market.
Citigroup is set to leave Mexican consumer banking and will sell its local brand CitiBanamex. Jane Fraser, Citigroup’s CEO, explained that Mexico continues to be a ‘priority’ for the company and remains confident of the country’s success in the future. Citigroup is revamping its strategy and will only support cross-border capital markets activity and trade flows in and out of Mexico. The company is the third biggest bank in the country but the Mexican government stated that its departure is not necessarily bad for the country.
Mexican oil giant PEMEX concluded a short-term refinancing scheme, with SHCP highlighting that the operation focused on exchanging bonds maturing in the short-term for new 10-year bonds. The company’s debt was reduced by US$3.2 billion after this operation, while its financial pressure decreased by US$10.5 billion.
“In Mexico, there is a significant number of startups that could potentially list on the stock market, especially unicorns. However, many of these companies are still lacking the accessibility, time or even capital to launch on the stock exchange,” explains Guillermo Cruz, US Managing Partner at Maquia Capital Financial Group. Cruz highlights that SPACs offer significant advantages for private companies that are seeking to become public, as SPACs’ popularity enhances.