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Citigroup to spin off Mexico business as sale efforts failed
https://www.whatjobs.com/news/usa/us-business-news/citigroup-to-spin-off-mexico-business-as-sale-efforts-failed
By Nithya Bose in US business news, posted May 30, 2023
Citigroup is now preparing for an initial public offering (IPO) of its Mexico business, Banamex, after an unsuccessful sale attempt.
The spin-off is expected to be completed in the second half of 2024, followed by a public offering in 2025.
While the listing destination is yet to be determined, a dual listing in Mexico and the US is a possibility.
Citigroup's decision to pivot to an IPO comes after a 16-month effort to find a buyer for Banamex.
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CEO Jane Fraser said the shift in strategy was aimed at maximizing the value of Banamex for shareholders and advancing the bank's goal of simplifying its operations.
Earlier sales talks reportedly collapsed despite attracting interest from potential suitors.
Citigroup had been discussing selling a significant portion of Banamex to Grupo Mexico for approximately $7 billion.
However, the negotiations became complicated due to Mexico's president's demands to protect workers and the bank's holdings of Mexican artwork in any transaction.
Citigroup acquired Banamex in 2001 for $12.5 billion, establishing its strong presence in Mexico as the only major US lender with a significant market share.
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Over the years, Banamex faced challenges and lost market share to local competitors.
With 38,000 employees, 1,300 branches, and millions of retail and pension customers, Banamex will continue to be reported under Citigroup's results until ownership falls below 50 percent
On a positive note, the shift to an IPO will allow Citigroup to resume a "modest" level of share buybacks starting this quarter, as the previous sale expectations had affected the bank's capital levels.
CEO Jane Fraser has been leading efforts to overhaul Citigroup since assuming her role in March 2021, with the intention of streamlining the bank's operations and optimizing its performance.
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