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German Larrea relies on Slim and the former Popular to buy Banamex from Citi

Date: May 31, 2023 Time: 06:13:53

Banamex will change hands. The sales book of the acronym behind the former Banco Nacional de México has been circulating among the country’s big banking players for more than a year without much success, but, finally, it seems to have found someone willing to pay the American Citi enough to to abort an IPO of the entity, its plan B.

German Larrea Mota Velasco, owner of the mining, logistics and infrastructure empire Grupo México, finalizes the fringes of an offer valued at 11,000 million dollars to take over Citi’s commercial bank, which will continue to operate in the country for institutional clients and retail banking. business after acquiring the license from Deutsche Bank.

According to the newspaper ‘El Financiero’, the proposal of the nicknamed Mexican copper king far exceeds that of Daniel Becker, president of Banco Mifel and the bank employers’ association, who was closing financing for the offer and had funds as co-investors from the American Apollo and from Abu Dhabi. His career as a bank does not seem to be decisive in this operation in which other rivals such as Banorte, Santander México or Banco Azteca de Ricarco Salinas have previously fallen.

Citi is assessing the amount, greater solidity and solvency of Larrea over his theoretical inexperience in the sector, although according to the Mexican press other fortunes with bank callous such as Carlos Slim, owner of Inbursa, or Antonio del Valle, of Grupo BX+ , they went up to join the operation as co-investors. This is an alliance that would involve the great Mexican capital that the president of the country, Andrés Manuel López Obrados (AMLO), claimed from the beginning to give his blessings to the sale of Banamex.

Among these fortunes is the former group of Mexican investors of the Spanish Banco Popular, which fell in June 2017 and was sold to Santander. Names like the fortunes linked to the Brewery

The CEO of Citi, Jane Fraser, said in last week’s annual results that the operation is in its final stretch and that there is a “fluent dialogue” with the possible buyers of the bank, although she recalled that she is keeping her plan B active, placing the entity on the stock market, if there is finally no agreement to close the operation before the end of March.

Fraser recalled that Citi has achieved the target of a 13% CET1 solvency ratio by the end of 2022, which includes a capital buffer of up to 100 basis points that “will allow them to absorb any temporary shock” related to the sale of the bank. The American group managed a valuation of up to 15,000 million dollars for its subsidiary, but the lower offers of some competitors such as Santander – just over half of that amount – indicated that Citi will not leave with great capital gains from the business.

“We’re currently in an active dialogue, so obviously I’m not going to comment in great detail here. And we continue to pursue a dual path, unsurprisingly, as both options are very viable here. When we’re in a position to provide clarity, We will do it. I think we have been very clear about the timing. We are also separating the two franchises, the institutional one from the consumer one that we are dressing, since we see the institutional franchise as a very important part of the global network,” said the bank executive. in the conference with analysts.

“As you can imagine, in the current environment, Mexico is key to many of our corporate clients around the world for their supply chains, and we play a very important role there. That’s a lot of work in that separation. I’m extremely pleased with the progress we’re making on that underlying work, but that we’re pursuing both tracks,” he added.

A renewing rival for BBVA and Santander

At the beginning of 2022, López Obrador called to “Mexicanize” Banamex, an icon in the country’s financial system, and used the possible to fulfill his wishes by Ricardo Salinas (Banco Azteca), Carlos Slim (Inbursa) or Carlos González Henk (Banorte). ), among others. In this way, a priori, the potential participation of the Spanish BBVA and Santander seemed ruled out, although the entity chaired by Ana Botín submitted an offer.

Comparatively, Santander valued 100% of its subsidiary in the country -which is larger than Banamex- at around 8,500 million dollars (7,500 euros) in the takeover bid they launched to remove it from the stock market at the end of 2021. The group’s subsidiary English is the second by assets and that of the American, the fourth. Citi’s departure from Banamex comes after two decades in the entity and under a management that is closer to failure than success.

The American group bought the country’s leading bank but has been relegated to fourth place, losing ground year after year due to the strength of promoters such as BBVA with Bancomer or Santander itself, which took a leap in dimension after taking over Serfin de Bank of America. Banorte, from the Hank family, is the third largest entity in the dominant Mexican commercial banking and also aspired to take over Banamex but the high demands of Citi forced it to opt for prudence and withdraw.

From another angle, experts also warn that the divestment of the American giant gives continuity to a path that other foreign entities operating in the country have recently undertaken. In fact, in February 2021, JPMorgan liquidated its private banking activities and transferred its client portfolio to BBVA. The Swiss UBS has also been liquidating its operations in Mexico since 2018 after the transfer of most of its operations to Grupo Afirme.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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