Citigroup Exits This Country After 20 Years Of Banking; Focus Only On US Retail Banking
While ending its 20-year retail presence in the country, Citigroup Inc (C.N) said that it will exit its Citibanamex consumer banking business in Mexico, the last of its overseas consumer businesses on Tuesday.
It seems that the decision to sell or spin off Citibanamex, Mexico’s third biggest bank by assets as of June, is part of chief executive Jane Fraser’s strategy.
The move is to bring Citigroup’s profitability and share price performance in line with its peers.
Earlier, Fraser pledged to simplify Citigroup by exiting from non-core businesses, including consumer franchises in 13 markets in Asia, Europe, the Middle East and Africa After taking up the top job last year.
Although this exit was not part of the announced plan Citigroup seems to be consistent with that “strategy refresh,” Fraser said.
The financial firm will continue to retain its institutional client business in Mexico as it has in other overseas markets.
Further, Citigroup plans to focus on its consumer banking business on a targeted U.S. retail presence, global wealth management, and payments and lending, according to its statement.
So far, the bank’s acquisition of Banamex for $12.5 billion in 2001 was the largest ever in Mexico.
The move amid a wave of foreign purchases after an economic crisis devastated the country’s banking sector in the mid-1990s.
Considering the opperchunity, Mexican billionaire Ricardo Salinas Pliego, who is ranked as the country’s third-richest man with a family fortune estimated in excess of $15 billion by Forbes said that he was analyzing if it was possible to acquire Citibanamex.
It is expected that the other possible buyers for Citibanamex could come from Canada as the big six banks have excess cash to spend on deals.
For instance, Bank of Nova Scotia (BNS.TO) already has a sizable Mexico business.
But locals are also not behind as the local arms of Banco Santander (SAN.MC) and BBVA (BBVA.MC) would also have the cash.
On the other hand, Mexican institutions Banorte and Inbursa could use an acquisition of Citi’s operations to challenge this duo.
How Does This Help?
While clarifying the subject, Fraser said that by disposing of the Mexico consumer businesses, “we’ll be able to direct our resources to opportunities aligned with our core strengths and competitive advantages,”.
Further adding that Mexico remains “a priority market” for Citigroup’s institutional businesses.