On Wednesday, Citigroup announced that it plans to pursue an initial public offering (IPO) for its Mexican subsidiary, Banamex, ending a 16-month effort to find a buyer for the unit.
The bank anticipates completing the separation in the latter half of 2024, with the IPO expected to occur in 2025, according to the release.
While a final decision on the listing location has not been made, a dual listing in both Mexico and the U.S. is a possibility. Following the announcement, Citigroup’s shares declined by 3%.
“After careful consideration, we concluded that the optimal path to maximize the value of Banamex for our shareholders and to advance our goal of simplifying our firm is to shift from our dual path approach to focusing solely on an IPO of the business,” CEO Jane Fraser stated in the release.
Since taking over as CEO in March 2021, Fraser has been implementing a major overhaul of the third-largest U.S. bank by assets.
One of her initial actions was to announce a significant reduction in the bank’s global presence. The plans to either sell or IPO Banamex were first revealed in January 2022.
The sale talks reportedly collapsed this week despite interest from several potential buyers. Earlier this month, it was reported that Citigroup was nearing a deal to sell much of Banamex to Grupo Mexico for approximately $7 billion.
The effort to sell was complicated by demands from Mexico’s president to ensure that workers and the bank’s collection of Mexican artwork were protected in any transaction.
Citigroup acquired Banamex for $12.5 billion in 2001, making it the only major U.S. bank with a significant presence in Mexico.
However, like many of its international retail operations, the business has struggled to maintain market share against locally owned competitors.
Banamex employs 38,000 people and operates 1,300 branches, serving over 12 million retail clients and approximately 10 million pension customers, according to Citigroup.
The bank stated that Banamex will continue to be reported in Citigroup’s financial results until ownership drops below 50%. Citigroup will retain its institutional and private banking operations in Mexico.
