Citigroup’s planned sale of its Banamex unit should go to Mexican investors and avoid mass firings, Mexican President Andres Manuel Lopez Obrador said, adding new restrictions that may undermine some of the bids.
Lopez Obrador, known as AMLO, said his administration was putting four conditions on the sale, including the requirement that Mexican capital back the deal. He also reiterated that any buyer must be up-to-date on tax payments, and that the bank’s massive art collection remain in Mexico.
“Now that Banamex is being sold, one of the things that we have to take care of is that there are no mass firings of workers,” Lopez Obrador said during his daily media conference Wednesday. “They are people, women and men, with experience and who can be very useful. But it usually happens that when these negotiations take place, they seek to save like this, laying off workers.”
Lopez Obrador doesn’t have the direct power to weigh in on the sale, but his finance officials do, as will the central bank and the country’s antitrust regulator. In addition to the informal influence the administration can wield, Mexican law allows any deal to be at the discretion of the presidentially appointed bank regulator, Barclays analyst Gilberto Garcia said in a note.
A Citigroup representative declined to comment.
Bidders for Banamex include Grupo Financiero Banorte and Spain’s Banco Santander, which are among the country’s biggest lenders. Successful bids by either of them could lead to the greatest number of layoffs due to redundancies. Other Mexican bidders include the billionaire Carlos Slim’s Grupo Financiero Inbursa, the mining magnate German Larrea and Grupo Financiero Mifel, a small Mexican lender run by the current head of the country’s banking lobby.
Garcia said AMLO’s conditions could be bad news for Citi, as well as Banorte and Santander, while they could give an edge to Slim’s bank and other Mexican bidders.
“Stricter conditions might thin the field of potential bidders or, alternatively, result in a lower potential bid from parties who could otherwise count on headcount reductions to achieve synergies,” Garcia wrote.
