Mexico's Fiery Financial Landscape

 In this week’s roundup, the Ministry of Economy announced that Mexico received a total of US$18.6 billion during 1Q23 in FDI, a year-to-year growth of 48%. Citigroup announced it would divest its unit in Mexico (Citibanamex) through an Initial Public Offering (IPO). Banxico announced it will maintain its previous monetary policy decision, explaining that headline inflation decreased worldwide but remains at elevated levels. 

Finally, Santander Mexico and the International Finance Corporation (IFC), a member of the World Bank Group, signed an agreement to promote sustainable construction practices that favor energy efficiency and the environment in Mexico.

Interested in more? Read more in this week’s roundup! 

Mexico’s FDI Grows 48% During 1Q23: Ministry of Economy

The Ministry of Economy, through its National Register for Foreign Direct Investments (RNIE), announced that the country received a total of US$18.6 billion during 1Q23 in FDI, a year-to-year growth of 48%. The manufacturing industry in Mexico received 53% of all FDI, which was distributed among transport equipment, the chemical industry, the agribusiness industry, computational equipment, electric energy generation equipment, metals and the alcohol and tobacco industry. The financial services sector ranked second with 33% of the total investments, worth up to US$6 billion. 

Citibanamex IPO Closes Door to Buyers

Citigroup announced it would divest Citibanamex through an IPO, ruling out an acquisition by Grupo México and other interested parties. “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 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 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. 

Monetary Policy Maintains Interest Rate at 11.25%: Banxico

Banxico decided to maintain its previous monetary policy decision, as the central bank believes that risk still exists and that inflation remains high. Banxico explained that headline inflation decreased worldwide but remains elevated. International financial markets stabilized after the turbulence seen during the first months 2023. However, Banxico explained that risks remain, according to a recent press release. “The Mexican peso appreciated, economic activity has shown resilience faced with a complex external environment and in 1Q23 it increased its expansion rate. The labor market shows strength,” explains Banxico.

Santander, IFC to Foster Efficiency in Construction

Santander announced an unprecedented agreement to foster sustainable practices, as environmental and sustainable construction projects have gained major support in Mexico. Santander Mexico and the IFC signed an agreement to promote sustainable construction practices that favor energy efficiency and the environment. Santander highlighted that the alliance would allow the bank to provide high-value solutions and access to sustainable financing and would drive a transition to a greener economy for construction companies in Mexico. Santander will also promote the Excellence in Design for Greater Efficiency (EDGE) certification among its clients in Mexico. This is an IFC program that certifies developments or buildings as sustainable constructions.