Jane Fraser, chief executive officer of Citigroup Inc., during an interview for an episode of “The David Rubenstein Show: Peer-to-Peer Conversations” at the Economic Club of Washington in Washington, DC, US, on Wednesday, March 22, 2023.
Valerie Plesch | Bloomberg | Getty Images
Citigroup said Wednesday it plans to pursue an initial public offering of its Mexico business Banamex, scuttling a 16 month effort to find a strategic buyer for the unit.
The bank expects to complete the separation in the second half of 2024, with a public offering likely to follow in 2025, Citigroup said in a release. It hasn’t yet decided on a listing destination, but a dual listing in Mexico and the U.S. is possible, a source familiar with the plans told CNBC.
Citigroup shares fell 3.4% in early trading.
“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 the release.
Fraser has been overhauling the third biggest U.S. bank by assets since taking over in March 2021. One of her first moves as CEO was to announce a dramatic reduction in the bank’s global footprint; plans to sell or IPO Banamex were disclosed in January 2022. Recent media reports said a sale was nearing completion at around a $7 billion valuation.
The sales effort was complicated by demands from Mexico’s president that any deal would protect workers and the bank’s holdings of Mexican artwork, according to the Wall Street Journal.
Citigroup bought Banamex for $12.5 billion in 2001, making it the only major U.S. lender with a large presence in Mexico. But as with many of its overseas retail units, the business lost market share to locally-owned competitors.
It has 38,000 employees and 1,300 branches, with more than 12 million retail clients and about 10 million pension customers, according to Citigroup.
Banamex will still be reported under Citigroup’s results until ownership falls beneath 50%, the New York-based bank said. Citigroup will keep its institutional and private banking operations in Mexico, the bank said.
A silver lining of the bank’s pivot is that it will allow the firm to resume a “modest” level of share buybacks this quarter; it had held off on repurchases because a sale was expected to impact the bank’s capital levels.
— CNBC’s Leslie Picker contributed to this report.
