López Obrador’s Interference Thwarted Banamex’s Direct Sale, Experts Say

Photo: The Pulse News Mexico Staff


Following news that New York financial firm Citigroup is preparing to put Mexican bank Banamex up for Initial Public Offering (IPO) in 2025, financial experts have expressed concerns that the potential direct sale of the bank was undermined by complications and stipulations ​​Mexican President Andrés Manuel López Obrador (AMLO) added to the acquisition process.

After announcing Banamex’s sale in January 2022 as part of the restructuring of Citigroup’s international assets, the bank received bids from multiple Mexican financial institutions, such as Banorte, Santander and Banco Azteca, though the most serious negotiations for the sale took place with Grupo México businessman Germán Larrea before ultimately falling though on Monday, May 22, following controversy surrounding the AMLO administration’s expropriation of 120 kilometers of Grupo México railways.

“In the midst of all the difficulties and complexities of the direct sale, until a couple of weeks ago it seemed that, despite everything, the sale of the bank to the group headed by Germán Larrea would come to fruition,” wrote El Financiero columnist Enrique Quintana. “The problem is that the business group that came into conflict with the government, which came to a head in the seizure of the tracks owned by Grupo México. That just derailed the direct sale process.”

The year-and-a-half-long, now-defunct direct sale process of Banamex was also reportedly plagued by demands from López Obrador, who placed multiple stipulations on the potential direct sale acquisition – including that the bank’s buyer must be Mexican, be up to date on tax payments and commit to not laying off any of Banamex workers post-sale.

“(Forcing the buyer to be Mexican) excluded several important bidders who considered making the acquisition from the equation, such as Santander, an institution whose president, Ana Botín, has an excellent relationship with President López Obrador, added Quintana. “This was a government responsibility.”

After the sale to Larrea fizzled out, AMLO went on to posture the idea of the Mexican federal government purchasing the bank for $3 billion, less than half of Banamex’s current market valuation, through a public-private association (PPP).

According to Maat Asesores consulting partner Federico Rubli, AMLO’s idea of Banamex’s government acquisition was nothing more than verbiage. Asesores went on to note that Citigroup’s IPO allows the firm to minimize government interference with the sale, while also giving a two-year window of opportunity to boost the bank’s valuation.

“Simply, for now the bank is not sold,” said Asesores. “It is convenient for Citigroup, because they are going to use this time to raise the value to obtain more at the IPO.”

For Mexican Institute of Finance Executives (IMEF) President José Domingo Figueroa, the IPO likewise gives Citigroup the opportunity to maximize value for its shareholders, a stance echoed by Citigroup CEO Jane Fraser at the time of the IPO’s announcement.

“2025 may be a more favorable time horizon to carry out this IPO, so that there is greater appetite in the market and lower interest rates,” added financial analyst Marco Montañez.

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