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By KELIN DILLON

One day after Mexican President Andrés Manuel López Obrador (AMLO) said that he was considering having his administration purchase Banamex, Mexico’s second-largest bank, New York-based financial firm Citigroup announced on Wednesday, May 24, that Banamex will no longer be offered for direct sale, but instead sold via initial public offering (IPO) on the Mexican Stock Exchange (BMV).

The New York financial firm originally purchase Banamex for $12.5 billion in 2001; now, 80 percent of Banamex’s capital stock is valued at $7 billion, a significant drop from its acquisition price.

Banamex went up for direct sale in January 2022 as part of Citigroup’s goals to cease its international operations in 14 countries, receiving starting bids from other Mexican banks like Banorte, Banco Azteca and Santander that ultimately petered out.

Citigroup’s most serious negotiations for the sale of Banamex were reportedly conducted with Mexican businessman Germán Larrea’s firm Grupo México, though the deal allegedly fell through after Larrea was unable to resolve concerns surrounding the Mexican government’s potential ability to take over the bank, like it did to 120 kilometers of Grupo México’s railway tracks only days prior.

While López Obrador then floated the idea of creating a public-private association (PPP) to allow the government’s acquisition of the bank, for which he would purportedly offer $3 billion, on Tuesday, May 24, Citigroup Chief Executive Officer Jane Fraser dashed the federal executive’s ambitions and lowball offer upon the release of a statement announcing Banamex’s IPO early Wednesday.

“We conclude that the optimal path to maximize the value of Banamex for our shareholders and advance our objective of simplifying our company is to move from our two-pronged approach to focus solely on an initial public offering of the business,” said Fraser at the time.

“Citi has operated for more than a century in Mexico, and we will continue to invest and grow our industry-leading institutional franchise in this important country to us, bringing the full potential of Citi’s global network to our institutional clients and of Citi Private Bank in this priority market,” continued the Citigroup CEO.

“We are convinced that it is very good news that the stock market is being considered for this operation,” said BMV Director Oriol Bosch following the IPO news.

Banamex is is expected to retain its deposits, credit cards, retail banking services, consumer credit, mortgage, insurance, pensions, and Retirement Fund Administrator (Afore) services, among other financial services, as well as its 38,000 employees, art collection and historical buildings as part of its detachment from Citigroup.

The bank will continue to operate under the Citigroup umbrella until the New York firm’s holdings decline under 50 percent of voting rights. In the meantime, Citigroup will begin separating its Citi assets from Banamex over the next two years, with the bank expected to hit IPO on the BMV in 2025.