By Chris Dorrell
Citigroup is nearing the sale of its Mexican retail bank Banamex in a deal that would be worth $8bn (£6.6bn), the Financial Times reported, despite government interference scaring off potential bidders.
According to three people familiar with the matter, the owner of Mexico’s largest mining company, Germán Larrea, is in exclusive talks to purchase Banamex.
The offer is likely to be valued between $6bn and $8bn, below the $10bn predicted by some of the most bullish analysts. In January 2022, Bank of America analysts suggested that the “franchise could be worth $12.5bn to $15.5bn”.
There was also interest from Mexican bank Banca Mifel, with backing from private equity fund Apollo, but Citi chose to continue with Larrea, people familiar with the matter said.
Banamex was put up for sale in January 2022. The deal prompted political controversy when Mexican President López Obrador said at the time that he would prefer the bank to have a domestic buyer.
Citi is retreating from international retail banking as part of a ‘strategic refresh’.
The Wall Street giant is exiting 13 markets across Asia and Europe as it attempts to focus efforts on the most profitable areas of its business.
In its quarterly results released a few weeks ago, Citi reported that net income fell to $2.5bn in the three months ending December 31, down from $3.2bn last year.
The decrease was driven by a higher cost of credit with Citi setting aside $1.8bn in allowances for credit loss compared to a release of $0.5bn the year before. Citi CEO Jane Fraser said the bank had made “significant progress” regarding its strategic plan to deliver “long-term value”.
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