Citigroup Inc. (NYSE:C) is set to separate its Mexico retail unit, Banco Nacional de México (“Banamex”), from its corporate and investment banking operations in the country by the second half of 2024. This announcement was made by Manuel Romo, the head of Citigroup’s Mexico division, as reported by Reuters.
The management anticipates initiating the process of taking Banamex public in 2025. Citigroup had previously revealed its intention to exit Banamex, encompassing its consumer, small business, and middle-market banking operations in Mexico, with plans to complete the separation in 2024, followed by an IPO in 2025. The company has now provided further details on the timeline, specifying the second half of 2024 for the separation.
Earlier in the year, Citigroup abandoned a $7-billion sale of the unit. According to Reuters, the company had been in talks with Grupo Mexico, led by Mexican billionaire German Larrea, for the divestiture. However, interference from the Mexican government led to both entities abandoning the deal.
Following the separation, the retail unit will operate independently, while the corporate and investment banking operations will persist in Mexico under the name Citi Mexico.
Manuel Romo, quoted in the Reuters article, stated, “We’re making progress promptly in the separation,” adding, “So that by the second half of 2024, the split between Banamex and Citi Mexico is complete.”
This move aligns with Citigroup’s broader strategy to exit consumer banking businesses in 13 international markets across Asia and the EMEA, focusing on growth in wealth management and personal banking. The bank has already closed sales in nine markets and is ahead in winding down its consumer banking business in South Korea.
In October 2023, Citigroup agreed to sell its China-based onshore consumer wealth portfolio to HSBC Holdings plc. The bank also plans to wind down its U.K. retail banking business while expanding personal banking and wealth management operations in the region.
These strategic exits are aimed at freeing up capital, enabling Citigroup to invest in wealth management operations in Singapore, Hong Kong, the U.A.E., and London, fostering long-term growth. The company expects to release $12 billion of allocated tangible common equity over time from such market exits, ultimately enhancing profitability and efficiency.
Citigroup’s shares (NYSE:C) have experienced a 3.5% gain in the past six months, contrasting with the industry’s rise of 16.1%.
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