After fail negotiations between Mexico and Citigroup to sell Banamex to the private sector in that country due to the conditions imposed by the Mexican president, Andres Manuel Lopez Obradorthe president now plans to assume that acquisition alone and create a large state bank, something that raises doubts among analysts.
“If they don’t want to sell, well, we’re going to talk to them, that is, we don’t rule out the possibility (…) because we do need a bank (…), it’s an opportunity”, commented López Obrador in his conference from the National Palace.
The president said that his acquisition could be through a public-private association and assured that the Mexican government has sound finances and has the capacity to borrow.
Doubts about the state bank
The director of Economic and Financial Analysis of Base Bank, Gabriela Sillerconsidered today that with its announcement, Citi removed all the “fear” and the “risk aversion” that President López Obrador had generated in the Banamex purchase-sale process and prevent its value from decreasing.
He also pointed out that a possible purchase by the Mexican government “it wouldn’t be good for anyone. Neither for the Government, nor for the company, nor for anyone”.
An analysis of the Bank of Americawhich concluded that the purchase by the Mexican government could impact the established banking sector, since it is the fourth largest bank in the country.
In addition, the deputy director of Economic Analysis at the financial group Monex, Janneth Quirozreflected that going out in Mexico would increase interest, knowing more closely what it is “a profitable bank” for what augured “a good demand”.
In addition, Daniel Beckermember of the Association of Banks of Mexicopointed out that Banamex’s listing on the stock market would be positive, since it would end years of drought in risk appetite in the Mexican financial market, amid fewer issuers and delisted shares.
citi announced in January 2022 its intention to sell part of its business in Mexicomainly its consumer portfolio and part of its assets, while it would maintain its large corporate portfolio.
Since then, Lopez Obrador It conditioned its sale on factors such as that it was sold to Mexican capital, that taxes were paid for the transaction, that there were no outstanding tax balances, and that Banamex’s cultural heritage remained in the country.
Some of the main banks in Mexico joined the bid, such as inbursaof tycoon Carlos Slim; Azteca Bank, Banorte, Santander and mifelamong others.
However, one by one they abandoned their intention to the last merchant, Mexico Groupin the midst of the occupation by the Armed Forces of a company concession for 120 kilometers of railway lines, which has been described as expropriation.
This Wednesday, citi announced that it will put aside negotiations between individuals and defined that the sale of Banamex will take place through the stock market through an initial public offering (OPI) in 2025.
In this sense, Lopez Obrador He said that the public administration could dispose of up to US$3 billion and offer shares for US$2 billion, if the sale value is still around US$7 billion.
“It is a good business”, affirmed López Obrador, since he maintained that the main client of the banks is the Government.
Banamexthe country’s fourth largest banking group, was acquired in 2001 by Citigroup for US$12.5 billion, and currently has 1,300 branches, 9,000 ATMs, 6,600 commercial clients and 12.7 million private clients, as well as 10 million pension fund holders.
citi He specified, however, that the IPO would be completed in 2025, which implies that the president will have left power, since presidential re-election is not allowed in Mexico and the next elections are in June 2024.
Siller explained that for this operation in Mexico or the United States, it will require the authorization of the competent authority, which in the country is the National Banking and Securities Commission.
After knowing the resolution of the US group, the Mexican stock markets reacted immediately and raised their hands to be part of their foray into the Mexican stock market.
On the one hand, the Mexican stock exchange (BMV) indicated that it counts “with the infrastructure, the window for access to financing and the capacity to accompany a process of this size and importance”, while the Institutional Stock Market (Biva) highlighted that they are “the best choice” to carry out this operation because it is the “most technological and innovative bag”.
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