(Bloomberg) — Citigroup Inc. will include its Mexican pension business in the sale of its consumer, small business and middle-market banking arms in the country, according to its top executive for Latin America.
“The only thing that will remain is our corporate bank and our private bank,” Ernesto Torres Cantu, chief executive officer for the region and the former head of the Mexican unit, said in an interview. “Everything else we are selling,” said Torres Cantu, who spoke on the sidelines of a meeting of leaders from the Western Hemisphere in Los Angeles.
The future of Citigroup’s Afore Banamex has been unclear since the lender in January announced its plans to dispose of retail and middle-market banking units in Mexico. While the firm immediately began reaching out to commercial clients about the changes, it was initially slower to contact pensioners.
Selling the business will be tricky since Mexico’s National Retirement Savings Commission has strict rules governing concentration in the pension industry. Ignacio Calle Cuartas, executive director of the asset manager Sura, told the El Economista newspaper in April that his company would be interested if Afore Banamex were put up for sale independently, though he said Sura wouldn’t be able to purchase the division’s administrator due to local regulations.
The sale “is a complex process,” Torres Cantu said. “It takes a while. We think the beginning of next year is probably the time frame we’re looking at. Or the end of the fourth quarter, more toward the beginning of next year.”
Mexican bank Grupo Financiero Banorte, Spain’s Banco Santander SA and billionaire Carlos Slim’s Grupo Financiero Inbursa SAB have all submitted non-binding bids for the broader Banamex unit this week, Bloomberg News reported on Wednesday. While those bids were due this week, the sale is in its early stages and any deal could still fall apart. Citigroup has also said it could still do an initial public offering of the unit.
Read more: Slim, Larrea Join Santander, Banorte in Bids for Citi’s Banamex
Mexico is the last country in Latin America where Citigroup has retail operations. It makes sense to sell the pension business along with the retail business because it also is focused on millions of clients, Torres Cantu said, calling them “inextricably linked.” He declined to give an estimate of sale prices for the businesses or discuss potential buyers.
Citigroup has vowed that Mexico will remain one of its top international markets even after the exit, because large corporate clients continue to invest in the country and set up operations there.
“For them, Mexico is relevant, so it’s relevant to us,” Torres Cantu said. “So we will continue to have a very strong presence in Mexico.”
Citigroup plans to continue hiring across its businesses in Latin America after it catapulted up league tables for investment banking in the region last year.
While equity capital markets fees in the region have dropped in 2022, Citigroup has seen the revenue it earns from advising Latin American companies on mergers and acquisitions increase in recent months, Torres Cantu said. Debt capital markets businesses are also holding up, he said.
“The wallet is down, particularly in ECM,” Torres Cantu said. “M&A is doing well and DCM is holding its own, but ECM is down significantly. But even with that drop in ECM overall, given our gain in market share, we’re doing well.”
Citigroup jumped to the No. 2 spot in investment-banking rankings in Latin America last year, as strong equity markets buoyed the IPO business. The firm’s equity-underwriting fees more than doubled to $101 million, giving it the second spot in that business, up from a No. 8 ranking just a year earlier, according to Refinitiv data.
“What is clear is our objective is to be the top investment-banking firm in Latin America,” Torres Cantu said.
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Source: news.google.com
