Citigroup has abandoned its attempt to sell Banamex and will instead hold an initial public offering for its Mexican unit in 2025.
The decision allows the U.S. bank to restart stock buybacks this quarter, the New York-based company said in a statement Wednesday. Citigroup had been holding off on share repurchases because a sale was expected to temporarily hurt capital levels.
"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," Chief Executive Officer Jane Fraser said in the statement.
Citigroup was unable to reach a deal despite more than a year of talks with a long list of suitors for the firm's consumer, small-business and middle-market banking divisions across Mexico. Ditching Banamex is part of Fraser's broader retreat from global consumer banking in order to focus on more profitable businesses. Citigroup is also finishing up efforts to dispose of 13 other retail units across Asia and Europe.
The company still plans to offer institutional and private-banking services in Mexico and will continue to separate those offerings from its retail products in coming quarters. It expects that work to be completed in the second half of next year, allowing an IPO to take place in 2025, according to the statement.
The business will retain the Banco Nacional de Mexico brand, known locally as Banamex. The division has roughly 12.7 million retail customers, 6,600 commercial clients and 10 million pension-fund customers.
The offering will include Banamex's 38,000 staffers as well as the unit's credit card offerings, retail banking products, consumer loans and residential mortgages, according to Citigroup. It will also include the division's annuities, pension assets, deposits and commercial banking products.
Banamex's art collection — one of the largest collections of Mexican art in the world — will also remain part of the new company.
"This decision demonstrates our commitment to choose the best outcome for our shareholders and allows us to resume a modest level of share buybacks this quarter," Chief Financial Officer Mark Mason said in the statement. "Given the uncertainty regarding regulatory capital requirements, we will continue to assess buybacks on a quarter-by-quarter basis."
Citigroup plans to report Banamex's results as part of the firm's continuing operations until its ownership in the company falls below a 50% voting interest, according to the statement.
—With assistance from Michael O'Boyle
