Citi will sell Banamex on the stock exchange, not Larrea

MEXICO CITY — Citigroup announced that it has given up its bid to sell Banamex and will instead make an initial public offering of its Mexican unit in 2025.

A person familiar with the matter told Reuters earlier this month that Grupo México, owned by businessman Germán Larrea, was in talks to buy the unit.

The New York-based company said in a statement on Wednesday that the decision allows the US bank to resume share buybacks this quarter.

Citigroup had been delaying share buybacks because the sale was expected to temporarily affect capital levels.

“We conclude that the best path to maximizing Banamex value for our shareholders and furthering our goal of simplifying our company is to move from our two-pronged approach to focusing solely on the company’s initial public offering,” said CEO Jane Fraser. Statement.

According to the statement, Banamex will hold credit card, retail banking, consumer credit, mortgage, insurance, pension, deposit and a full offering of business banking products.

“The approximately 38,000 employees who contribute to the business, as well as the collection of artworks and historic buildings, will continue to be part of Banamex,” he stressed.

Citi said businesses will continue to report as part of its ongoing operations until ownership of the business falls below 50 percent of the voting rights. After that, Citi will no longer report it in its consolidated financial statements.

Since announcing its intention to exit retail banking in 14 markets across Asia, Europe, the Middle East and Mexico as part of its strategic renewal, Citi has signed sales agreements in nine markets and closed sales in seven markets, including Australia, Bahrain, India and Malaysia. The Philippines, Thailand and Vietnam.

In addition, Citi is moving forward with previously announced closures of its consumer businesses in China and Korea, and its entire operations in Russia.

After the announcement, Citi shares fell 1.6 percent in New York, while Grupo México shares rose more than 6 percent on BMV, trading above 82 pesos.

A source familiar with the matter said recent complications in the sale influenced the decision, including demands from the Mexican government and other factors.

Banamex was acquired for $12.5 billion in 2001, while recent negotiations have estimated it at around $7 billion.

Grupo México’s proposal has surpassed that of Mexico’s Banco Mifel, Daniel Pickler, and also the last two bets of its retail banking unit.

Citigroup first announced in January 2022 that it was leaving Mexico, ending its 20-year retail presence in the country and launching an extended bidding phase.

In addition to potentially weakening business, Citi also has to deal with restrictions that the López Obrador government placed on the deal, including a ban on mass layoffs.

In February, Fraser met with AMLO, amid the bank’s attempt to complete the sale of its domestic unit.

With information from Bloomberg and Reuters