The bank led by Jane Fraser announced on May 24 that, finally, the option to exit its retail business in the country would be through an Initial Public Offering (IPO), an alternative that was on the table from the beginning, but that in 2022 it seemed distant.
“After careful analysis, we conclude that the optimal path to maximize Banamex’s value for our shareholders and advance our strategic objective of simplifying our firm is to move from our dual path to focus solely on an IPO of the business,” Fraser said in a statement.
Thus ended a game that had an uncomfortable intervener: President Andrés Manuel López Obrador. Because, when it seemed that Larrea, who occupies the fourth position in the list of ‘The 100 most important businessmen in Mexico’, had reached an agreement to pay 7,100 million dollars for 80% of the business (the remaining 20% would go to stock market), the government published a decree in the Official Journal of the Federation to occupy a section of tracks, in the hands of Ferrosur, a railway company of Grupo México, under the argument that it is necessary for the Interoceanic Corridor project, one of the key works of the administration. Larrea, who in the same week of the publication of the decree had visited the National Palace twice, was leaving the game.
The Bank of Mexico
Now, the sale process will be longer, given that the bank seeks to give “the maximum value to its shareholders.” Citi has to split the business in two: Citi Mexico and Banamex, once separated, in the second half of 2024, Banamex will go out in an IPO during 2025.
Marcos Martínez, president of the board of directors of the Grupo Bolsa Mexicana de Valores (BMV), believes that it will be an operation that will be carried out in the national market. Due to the size of the bank and its relevance in the Mexican financial system, it would be historic and, therefore, the executive considers it even more important that it be carried out in the country. “I find it very difficult for them not to do it in Mexico because it is a Mexican company, designed for Mexican investors,” he details.
Martínez, who elaborates on the 130-year history of the BMV as the vehicle for the listing of companies on the stock market, points out that the IPO represents an opportunity that excites market players. The impact of Banamex’s exit to the BMV would also have a positive multiplier effect on other companies that have considered an IPO. “If it is something so visible and of such a large amount, it will make a lot of people turn to look at this market that, for them, today is unknown or not of interest,” he says. “Financial and non-financial, investors and non-investors, the same government so interested and involved. Yes, it is an operation that will have everyone’s attention.”
Since the sale of Banamex was reported, it was pointed out that it would not be in parts and that Citigroup would only keep the business banks, that is, those that serve large firms. The rest, which includes the entire network of ATMs, branches, payroll loans, personal loans, cards, housing and SMEs, was for sale. Also the insurance and Afore businesses, the great artistic and historical collection, the iconic buildings owned by the bank and the Citibanamex Convention Center.
players dance
Once the sale was announced, the players who raised their hands for the purchase were Banorte, Santander, Inbursa, Banco Azteca, Grupo Mifel, the businessman Javier Garza and Grupo México, owned by Germán Larrea. Thus, after signing a series of strict confidentiality agreements, the interested parties accessed a data room that revealed the financial status of Citibanamex.
