Analysis: Citi's Banamex unit could receive bids from Mexico moguls, global banks
12/01/2022 20:13
By Kylie Madry, Valentine Hilaire and Carolina Pulice
MEXICO CITY, Jan 12 (Reuters) - After Citigroup Inc C.N on
Tuesday announced plans to sell its Mexican consumer banking
business, analysts said homegrown billionaires such as Carlos
Slim and Ricardo Salinas Pliego were among front-runners to buy
the Citibanamex assets. urn:newsml:reuters.com:*:nL1N2TR2S5
With the finance ministry saying it is watching the sale at
Citibanamex https://www.reuters.com/business/citi-exit-mexican-consumer-banking-business-strategy-revamp-2022-01-11,
Mexico's No. 3 consumer bank, for signs of undue market
concentration https://www.reuters.com/business/mexico-eyeing-market-concentration-citi-sale-ministry-says-2022-01-12,
the most established players in the country appear to be less
favored in the carve-up. urn:newsml:reuters.com:*:nL1N2TS18H
Alejandra Marcos, an equity analyst at Intercam Banco, said
Slim's Inbursa GFINBURO.MX , now Mexico's seventh-largest bank,
has the means to present a strong offer and would not face the
same obstacles as peer Grupo Financiero Banorte GFNORTEO.MX
from antitrust regulators due to the latter's market share.
"The only Mexican bank with the financial capacity for this
is Inbursa, but of course other groups of entrepreneurs could
join to make an attractive offer," Marcos said.
A spokesman for Slim did not immediately respond to a
request for comment. Banorte did not respond to a request for
comment.
Meanwhile tycoon Salinas, who controls the supermarket and
banking chain Elektra that includes Banco Azteca ELEKTRA.MX ,
said on Tuesday evening he had asked his team to study the
purchase of the Citigroup unit, which analysts said would likely
carry a price tag between $4 billion and $8 billion.
Foreign banks from Canada's Scotiabank BNS.TO - now
Mexico's No. 6 bank by assets - to Brazil's Itau Unibanco
Holding SA ITUB4.SA may also be in the mix, analysts said.
"We would expect (Scotiabank) to at least kick the tires on
(Citibanamex)," said Barclays Canadian financials analyst John
Aiken. "We do not know if Mexico is necessarily where it would
like to deploy all of its excess capital."
Financial sector sources said Mexico's left-leaning
government was likely to want a buyer that did not increase the
market power of the top banks in the country, such as Spain's
BBVA BBVA.MC , which currently has over a fifth of the market.
It also appeared probable that a Mexican successor to Citi
would be preferred, opening up the possibility that a consortium
of buyers could club together for the assets, they said.
The finance ministry pointed to its earlier comment https://www.gob.mx/shcp/prensa/decision-de-citigroup-no-afecta-su-confianza-en-mexico.
Interior Minister Adan Augusto Lopez observed on Wednesday
the bank's brand was "one of the most important in the country"
and said he expected "various business groups" to signal an
interest in launching an offer for Citibanamex. urn:newsml:reuters.com:*:nL1N2TS18H
Lopez said the government was not interested in the assets.
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.
Some analysts said the door could still be open to some of
BBVA's nearest rivals, including Santander Mexico BSMXB.MX and
Banorte, respectively Mexico's No. 2 and No. 4 players.
A banking source with knowledge of the matter said Santander
was among potential bidders for Citibanamex. Santander declined
to comment.
Banorte shares were up 3.4% while Santander Mexico shares
fell 0.8% on Wednesday.
Brazil's Itau, which bought Citi's consumer operations in
that country in 2016, could also be a bidder, said Eduardo
Rosman of BTG Pactual Equities.
Itau declined to comment.
Brazil-based online lender Nubank could also be interested,
Rosman added. Nubank has been stepping up efforts in Mexico
recently and has a massive valuation, though the purchase would
go against Nubank's strategy of building verticals from scratch,
he said.
"For an international bank just looking to enter the
(Mexican) market, they'd gain 10% of the market share just
through the purchase. That's a great start. For a bank that's
already established in Mexico, that may be hard to justify to
regulators," said Carlos Alberto Gonzalez, director of analysis
and stock market strategy at Monex.
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BREAKINGVIEWS-Citi’s Mexico exit leaves it neater but not better
urn:newsml:reuters.com:*:nL4N2TS32S
Mexico eyes antitrust on Citi deal, expects plenty of interest
for assets urn:newsml:reuters.com:*:nL1N2TS18H
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(Reporting by Kylie Madry, Valentine Hilaire and Carolina
Pulice in Mexico City
Additional reporting by Noe Torres, Dave Graham, Jesus Aguado,
Carolina Mandl, Noel Randewich and Nichola Saminather; Editing
by Christian Plumb and Matthew Lewis)
((Valentine.Hilaire@thomsonreuters.com;))