Citigroup throws in the towel with the sale of Banamex. After maintaining contacts with Santander, Banorte, Banco Azteca, Inbursa and all kinds of investors over the past two years, the US bank has decided to end the exclusive negotiations it has with Grupo México owned by Germán Larrea to sell him a majority stake. in the historic Mexican bank. The shares of the mining holding company shoot up 8% on the stock market, while those of Citi fall more than 3% after staying as it was.
Citi has announced this Wednesday that it will try to take it public in 2025 through an Initial Public Offering (IPO) for the sale of Banamex, which groups its banking activities for consumers, small companies and medium-sized companies in Mexico, but excludes the area of investment banking and big investors in the country. The recent banking crisis in the US with the bankruptcy and rescue of several medium-sized banks has reduced the valuations of entities that operate both in the US and in Canada and Mexico given the uncertainty of investors about the state of the sector.
The US entity separated both business units as a step prior to a divestment that included the sale of a controlling stake to billionaire Germán Larrea along with other Mexican investors and, at the same time, a partial sale on the stock market. The operation was valued at more than 7,000 million dollars and was going to rearrange the banking map of Mexico, something that ultimately has not happened and the sector will continue to be dominated by BBVA (Bancomer), Banorte and Santander.
Banamex (Banco Nacional de México) was the largest bank in the country until it was bought by Citi and maintains an extensive distribution network that includes approximately 1,300 branches, 9,000 ATMs, approximately 12.7 million retail banking clients, approximately 6,600 clients of business banking and approximately 10 million clients of pension funds.
“After careful consideration, we have concluded that the optimal path to maximize Banamex’s value for our shareholders and advance our goal of simplifying our company is to focus exclusively on an IPO of the business. Citi has operated in Mexico for more century and we will continue to invest and grow our leading institutional franchise in this key global hub, bringing the full power of Citi’s global network to our private banking and institutional clients in this priority market,” said Jane Fraser, in a statement. CEO of Citigroup.
Lopez Obrador offers to buy it
The president of Mexico, Andrés Manuel López Obrador, has regretted that Citigroup is not going to sell Banamex, the main bank in Mexico, and has maintained that negotiating with the US entity so that it can be acquired by the Government is not ruled out. This is how the Mexican president pronounced himself this Wednesday, after learning that Citigroup has suspended negotiations to sell it.
This decision allows the United States bank to restart share repurchases this quarter, as explained by the company in a statement, in which it has argued that the IPO is the “optimal” path to maximize the value of the entity. Faced with this refusal, López Obrador has expressed that Mexico “needs a bank” and continues to value the purchase of Banamex as a good opportunity.
Precisely, the president has joked about these comments that he already made on previous occasions and that they would have used from Citigroup to request “more guarantees.” The president’s plan would go through a public-private partnership where the Government would contribute an amount, and it could have up to 3,000 million dollars (about 2,790 million euros) and the rest, about 2,000 million dollars (around 1 860 million euros), through the sale of shares to Mexicans.
The purchase offer of Grupo México de Larrea, without a presence in the banking sector but with a broad presence in mining and logistics, was imposed in 2022 ahead of the presentation by Daniel Becker, president of Banco Mifel and the banking employers’ association, which was going to accompanied by funds from the American Apollo and Abu Dhabi. The operation responded to the guidance given by the Government of López Obrador (AMLO) so that Banamex remains in the hands of Mexican shareholders.