NEW YORK/MEXICO CITY (Reuters) – Citigroup Inc (C.N) views its Mexican banking unit Banamex as a solid business and has no plans to sell it, sources familiar with the matter said.
Analysts and business columnists have speculated in recent days that leading businessmen in Mexico could be planning to buy Banamex as Citigroup tries to shed assets.
Telecommunications entrepreneur Carlos Slim, the world’s second wealthiest man, was widely seen as a potential buyer, but his spokesman told Reuters on Friday that he was not in talks to acquire the bank.
The report that Citigroup is not looking to sell Banamex gave an additional boost to the Mexican peso <MXN=> MEX01 on Wednesday, according to a trader. Rumors of a sale had pressured the currency on expectations that potential Mexican buyers might need to switch pesos into dollars to pay for the acquisition.
Citigroup is shifting businesses outside of its main retail and commercial banking operations into a “bad bank” known as “Citi Holdings.” Citi Holdings will stay on the company’s balance sheet, but over time Citi will look to sell or wind down many of those businesses.
Banamex, the second largest bank in Mexico, will reside in Citi’s “good bank,” known as Citicorp. Banamex has both commercial and retail banking operations. Citi declined to comment.
Citigroup’s acquisition of Banamex for $12.5 billion in 2001 was the largest ever in Mexico at the time and was part of a wave of foreign purchases after an economic crisis devastated the bank sector in the mid-1990s.
Mexico’s banking industry is dominated by Spain’s BBVA (BBVA.MC) and Banco Santander SA (SAN.MC), as well as HSBC Holdings Plc (HSBA.L), Canada’s Scotiabank (BNS.TO) and locally controlled Banorte (GFNORTEO.MX).
Banks in Mexico have weathered the world financial crisis relatively well because they have not dabbled in risky businesses such as subprime lending. But consumer credit losses in Mexico have been ticking higher as the global economy slows.
(Additional reporting by Michael O’Boyle in Mexico City)
(Reporting by Dan Wilchins in New York and Noel Randewich in Mexico City; Editing by Andre Grenon and Carol Bishopric)