Citigroup is splitting its Mexico retail unit from its corporate and investment business by the second half of 2024. According to Citigroup’s Mexican head, Manuel Romo, this is the first step toward going public for Banamex, the current retail component, with an IPO set for 2025.
In May, Citigroup decided against going through with a $7 billion sale of Banamex to Grupo Mexico, owned by billionaire German Larrea. According to news reports at the time, hindrances included government intervention in setting demands on the deal, which included a freeze on job losses, and the sale had to be to a Mexican national.
Romo says, “Our plan is that by the second half of 2024, there will be two independent financial groups operating, Citi Bank México and Banco Nacional de México.”
Negotiations were further complicated when the Mexican navy “expropriated” part of Grupo Mexico’s railway from Coatzacoalcos to Medias Aguas as part of the Inter-Oceanic Corridor project. This will modernize links between the Pacific and Gulf coasts.
“We know that the transaction will be historic in the Mexican market because of who it is, but the timing of when and how long it lasts will depend on the markets,” says Sinead O’Connor, corporate director of Consumer Banking at Citibanamex.
Banamex will focus on consumer banking, while Citi will focus on its corporate clients. In July, Citi purchased Deutsche Bank’s corporate banking license in Mexico. Citi bought Banamex, then known as Bancacci, in August 2001 for $12.5 billion in cash and stock. It was the first takeover of a large Mexican bank by a US financial institution.
Elsewhere, Grupo Santander has an agreement with BNP Paribas over its Mexican assets, including investment fund operations. This will see Santander Asset Management enter the local insurance industry. Terms of the deal have not been made public and are subject to regulatory approval.
In a busy end-of-year period for Mexico’s banking sector, J.P. Morgan is collaborating with Actinver. The alliance will see a full range of asset management products and exchange-traded funds enter the market. J.P. Morgan estimates that nearshoring will add $130 billion to Mexico’s exports and 2.5% of GDP growth over the next five years.