Citigroup decides to change its strategy regarding the sale of Banamex and has plans to conduct an initial public offering (IPO) on the stock exchange by 2025.
Instead of selling Banamex to a single buyer, Citigroup will choose to divide it into shares and offer them on the stock market, with the aim of obtaining as much capital as possible.
Previously, Citigroup had announced a dual approach to exiting the business, including preparing for a potential IPO. However, after careful consideration, Citi CEO Jane Fraser stated that they have decided to focus solely on one IPO as they believe it is the best way to maximize Banamex’s shareholder value and simplify the company.
The decision also allows Citigroup to resume modest share buybacks this quarter, according to Citi Chief Financial Officer Mark Mason. However, they will continue to evaluate buybacks on a quarterly basis due to uncertainty regarding regulatory capital requirements.
With this new strategy, the possibility of Germán Larrea, executive director of Grupo México, acquiring Banamex immediately closes. Larrea had shown interest in buying the bank and there had been speculation about a possible $7 billion deal for 80% of the institution.
Citigroup assures that Banamex will continue to offer financial services through its extensive distribution network and will retain its name and brand. In addition, the approximately 38,000 employees who support these businesses, as well as Banamex’s art collection and historic buildings, will continue to be part of the entity.
Citigroup’s decision comes after Mexican President Andrés Manuel López Obrador mentioned the possibility of the government participating in the purchase of Banamex in case Grupo Mexico renounces acquiring it.
In short, Citigroup has abandoned the sale of Banamex and will focus on conducting an initial public offering on the stock exchange in 2025. This new strategy allows them to maximize shareholder value and simplify the company. Banamex will continue to offer financial services and retain its brand. The decision also puts an end to the possibility of Germán Larrea acquiring the bank immediately. The Mexican government is considering the option of a public-private partnership in case Grupo Mexico withdraws from the purchase.