Citigroup announced Wednesday that it plans to pursue an initial public offering of its Mexico business, Banamex, ending a 16-month search for a buyer. According to Citigroup, the separation will be completed in the second half of 2024, followed by a public offering in 2025. It hasn’t decided where it will list, but a source familiar with the plan said a dual listing in Mexico and the U.S. is possible. Citigroup shares fell 3% on Wednesday. “After careful consideration, we concluded the optimal path to maximizing the value of Banamex for our shareholders and advancing our goal to simplify our firm is to pivot from our dual path approach to focus solely on an IPO of the business,” CEO Jane Fraser said in the release.
Fraser has been overhauling the third-largest U.S. bank since taking over in March 2021. When she became CEO, she announced a dramatic reduction in the bank’s global footprint. Plans to sell or IPO Banamex was disclosed in January 2022. Sales talks reportedly fell apart this week despite garnering interest from several potential suitors. Bloomberg said Citigroup had closed on a deal to sell Banamex to Grupo Mexico for about $7 billion earlier this month. The sales effort was complicated by demands from Mexico’s president that workers and the bank’s holdings of Mexican artwork be protected in any transaction, according to The Wall Street Journal. Citigroup bought Banamex for $12.5 billion in 2001, making it the only major U.S. lender with a large presence in Mexico. But as with many of its overseas retail units, the business lost market share to locally owned competitors. Citigroup says Banamex has 38,000 employees and 1,300 branches, with over 12 million retail clients and about 10 million pension customers. The New York-based bank said Banamex will still be reported under Citigroup’s results until ownership falls below 50%. The bank said Citigroup would keep its institutional and private banking operations in Mexico.
