Citi announced Wednesday that it is canceling the sale of its subsidiary in Mexico and will list its business in the country through a public offering for sale (OPV) of shares. The bank is working to separate its retail, small business and middle-market banking operations in Mexico, which it will list publicly, from its institutional operations, which will remain part of Citi. The group has not found an attractive offer for Banamex, its commercial banking subsidiary in the country. The IPO is definitely slated for 2025, which leaves time to reconsider depending on the circumstances. After all, the country’s fourth largest bank by assets will not go to billionaire Germán Larrea or banker Daniel Becker.
So far, Citi has followed a dual process to dispose of Banamex: seeking outright offers to buy the company while preparing for a potential IPO, which is ultimately the path chosen. “After careful consideration, we have concluded that the optimal way to maximize Banamex’s value for our shareholders and to advance our goal of simplifying our business is to shift from our two-pronged approach and focus solely on an IPO . [de salida a Bolsa]’ said Jane Fraser, CEO of Citigroup, in a statement.
Banamex is the fourth largest bank in Mexico after BBVA, Santander and Banorte. After more than a century of commercial banking in Mexico, Citi announced its decision to withdraw from the country early last year. Spain’s Banco Santander submitted a non-binding offer, but it was not attractive enough and announced last July that it would be excluded from the process. Participating in the final stages of the bid for the company, valued at between $7,000 and $10,000 million, were Grupo México owner and second richest man in the country, Germán Larrea, and banker Daniel Becker. The most important banks in Mexico, such as Inbursa and Banco Azteca, also participated in the tender. Neither could fully convince Citi.
Banamex will retain its brand on the IPO and continue to be one of the most important financial groups in Mexico. Through an extensive distribution network with approximately 1,300 branches, approximately 9,000 ATMs, 12.7 million retail banking customers, approximately 6,600 commercial banking customers and approximately 10 million, the company will continue to provide the full spectrum of financial services to consumers and small and medium-sized businesses offer pension fund customers.
Post-IPO, Banamex will retain credit card business, retail banking, consumer lending, residential mortgage lending, insurance, annuities, pension fund management, deposits and a full range of commercial banking products. The approximately 38,000 employees currently working at these companies, as well as Banamex’s art collection and historic buildings, will remain part of the group.
Citi has not yet made a decision on the percentage of capital initially placed on the market. The subsidiary will continue to be part of Citi’s operations until ownership falls below 50%. At this point the company will be deconsolidated.
The sale of the Mexican subsidiary is the one that has rocked Fraser the most since the company announced its intention to exit consumer banking in 14 markets across Asia, Europe, the Middle East and Mexico as part of its strategic renewal. Citi has signed distribution agreements in nine markets and completed sales in seven markets including Australia, Bahrain, India, Malaysia, the Philippines, Thailand and Vietnam. The company is making progress in winding up the Citi consumer business in China and Korea and its global presence in Russia.
Citi plans to continue serving high net worth individuals and families in Mexico through its institutional banking business and Citi Private Bank. Citi expects to complete the spin-off of its institutional client business in the second half of 2024, paving the way for an IPO.
Jane Fraser added in the statement, “Citi has been operating in Mexico for more than a century, and we will continue to invest in this important global hub and grow our industry-leading institutional franchise to bring the full power of Citi’s global network to our institutions and private banking clients in this priority market.”
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