Farewell Citibanamex | Article by David Ordaz

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David Ordaz

This Monday, Citi announced:successful separationits institutional banking business in Mexico (consumer and business banking), in a process that began in 2021 and this, he said, marks a significant step in the implementation of the strategic simplification plan.

“With this separation, effective December 1, Citi will now operate two independent financial groups in Mexico: Financial Group City Mexico and financial group Banamex (…) this separation represents an important milestone in our simplification and moves us closer to our long-term vision of a more connected bank focused on our core strengths,” said Jane Fraser, CEO of Citi.

According to the official statement, the group consists of “proud“implement this plan in a careful and transparent manner and noted that his obligation with customers in Mexico “stronger than ever” and that it will continue to connect Mexico and the world through its market-leading platforms for investors and corporate clients.

In this regard, Ernesto Torres Cantu, director of Citi International, stated that Mexico this is one of his institutional markets He said the company will continue to have a presence across four business lines (Banking, Markets, Services and Citi Private Bank), offering a portfolio of financial products and services to financial institutions, governments, investors, multinationals and companies seeking internationalization. institution.

But beyond the “successful demerger” that Citi talks about, the truth is that the sale of Banamex was refusal strategic for Citigroup and this was largely due to political consequences.

Citi’s Banamex brand was closed despite being located between third and fourth place clientsthanks to the great cultural heritage it has in Banamex Cultural Foundationwhich ranges from various works to the Iturbide Palace itself.

Six years ago, the Banamex purchase and sale operation was interrupted intervention presidential government Andres Manuel Lopez Obrador and the resulting financial uncertainty. The threat of taxes on the transaction was considered a determining factor in Citigroup’s decision to abandon the transaction within the current six-year term.

In May 2023, López Obrador noted at his morning conference that Mexican government would be interested in participating in the acquisition of Banamex if Germán Larrea, owner of Grupo México, exits the operation.

The President proposed Public-private partnership (APP) with the participation of the government and noted that the tax burden could be reduced through a significant payment of 28.5% of the total cost of the transaction. However, these statements apparently caused negative reaction Citi executives who finally they decided to refuse operation.

According to a number of financial analysts, AMLO’s statement about paying taxes scared the leaders bank because they believed that this responsibility would fall on the financial institution and not on Germán Larrea since the transaction was carried out in or accounted for in the United States. In addition, this sale will constitute failure for Citigroupbecause nearly 16 months after announcing its intention to divest an important part of Mexico’s financial institution, the process has finally collapsed.

And after Citi’s initial announcement of the sale of Banamex, the López Obrador government introduced conditions this limited the options available to bidders. These conditions included restrictions for political reasons and demand “Mexicanness» from potential buyers. And these conditions discouraged the major banks and left Germán Larrea as the only interested bidder, although he was also subject to criticism and political pressure from the government.

At that time, it was revealed that an agreement had been concluded for Banamex to be purchased by Grupo México. almost closed and will reach an estimated amount between 7000 and 7200 million dollars for more than 80% of the shares, but pressure from the government, including reform of the Mining Law, which affected other Larrea enterprises, and the seizure of railway lines in Veracruz, led to the collapse of the operation.

In a statement issued in May 2023, the bank indicated that if an outright sale was not achieved, it would resort to the public securities market.

In terms of concentration of economic power, this would not pose any additional risk, but the opening of the stock market could allow greater participation of other investorswhich can be considered positive.

The sale of Banamex marked important milestone in the Mexican banking industry and left a bittersweet taste in both Citigroup and the Mexican government. While the Citibanamex financial group sought better conditions in the government securities market, Banco del Bienestar continues to expand its presence in the securities market. national banking sector.

uncertainty persists around the sale of Banamex and the implications of government intervention and political pressure on the deal. These events highlight the importance of a stable and reliable environment for the development of financial transactions and the investment climate in the country.

Six years later, Grupo Financiero Banamex will include National Bank of Mexicowhich offers retail banking services including high net worth and personal banking, personal loans, mortgages, deposits, payroll services, payments and a full range of business banking products, as well as Banamex, Afore Banamex, Banamex Insurance and Pensions cards Banamex, which offer credit cards, pension asset management, insurance and pensions respectively.

Meanwhile with his online banking and mobile applications and network approximately 1300 branches and more than 9100 ATMs throughout the country, will continue to offer its financial services to almost 20 million clientswith 140 years of experience in the country, Citi detailed.

Most 39,000 employees which currently support these enterprises, as well as the art collection and historical buildings of Banamex, as well as the social and cultural funds (Fomentos), will continue to be part of Banamex Financial Group.

Also in February it was announced Ignacio Deschamps He will be president of the board of directors of Grupo Financiero Banamex and Banco Nacional de México.
Ernesto Torres Cantu He will continue to serve as a board member of both the financial group and the bank. Manuel Romo will serve as CEO of Grupo Financiero Banamex and Banco Nacional de México.