Citigroup said it will spin off its Mexican retail bank through an initial public offering, reversing course on a plan hatched early last year to sell the unit.
The US lender plans to completely separate its Banamex division, which has 38,000 employees and is one of the largest consumer banking franchises in Mexico, by the middle of next year. The bank said an IPO of the unit is likely by the end of 2025.
Citi executives previously said they had been pursuing a dual process in order to exit Banamex, and recently decided an IPO would be the better route for investors.
Chief executive Jane Fraser, who is leading a broader effort to slim Citi down, said in a statement: “After careful consideration, we concluded that the optimal path to maximising 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.”
The IPO plan marks the end of a more-than-year-long effort to sell the unit. As recently as February, the Financial Times reported that Citi was in exclusive talks to sell Banamex to Grupo Mexico, which is owned by billionaire Germán Larrea. The deal was expected to value the unit at up to $8bn. It is not clear why or when those negotiations ended, or why the bank did not pursue offers from other interested bidders.
Citi, on Wednesday, did not say what it thought Banamex could fetch in an IPO.
Citi bought Banamex, one of Mexico’s oldest and most prestigious bank brands, for $12.5bn in 2001 to much fanfare. Since then, though, it has fallen from the country’s second-largest bank to the fourth, after struggling to compete in a market dominated by other foreign lenders. Analysts and bankers have said a litany of reasons are to blame, including poor management and bloated costs to limitations from US regulatory requirements.
Citi said on Wednesday that it had invested $2.5bn in upgrading the company’s “digital and mobile banking capabilities.”
The US bank also announced on Wednesday that it plans to resume share buybacks later this quarter.
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