Citigroup Plans IPO for Mexican Banking Unit Banamex

Citigroup says it has decided to take its Mexican retail banking unit Banamex public.

The lender announced Wednesday (May 24) it plans to pursue an initial public offering (IPO) for Banamex, after exiting the consumer banking market in Mexico last year.

“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 a press release.

A report Wednesday by The Wall Street Journal notes that Citi’s attempts to sell the bank were complicated by Mexican President Andrés Manuel López Obrador, who had said he would require any deal to include worker protections, taxes and guarantees that Citi’s collection of Mexican artwork would remain in Mexico.

According to the WSJ, Lopex Orbrador said Tuesday that his administration was considering bidding for Banamex if a deal with Mexican businessman German Larrea didn’t materialize.

Citi said Wednesday that Banamex will retain credit cards, retail banking, consumer loans, residential mortgage lending, insurance, annuities, pension assets management, deposits and commercial banking products.

“The approximately 38,000 employees currently supporting these businesses, as well as Banamex’s art collection and historical buildings, will remain part of Banamex,” the company said in its news release.

Citi said it will continue to operate a locally licensed banking business in Mexico through its Institutional Clients Group (ICG), which provides a network of banking and advisory services to private and public institutions, financial sector clients and investors.

“Citi has been pursuing the carve out of the ICG business since announcing its plan to separate Banamex,” the company said. “This work, including obtaining the requisite regulatory approvals, is ongoing. Citi expects that the separation of the businesses will be completed in the second half of 2024 and that the IPO will take place in 2025.”

Citi’s decision to divest itself of Banamex last year was part of a larger effort by the bank to move away from retail banking. The company also sold consumer banks in Indonesia, Malaysia, Thailand and Vietnam to Singapore’s United Overseas Bank in a $3.7 billion deal.

Later in the year, the bank said it was winding down its retail operations in the U.K. to focus more on its wealthiest customers.