Citi’s Mexico Sale Has Finance Minister on Antitrust Alert
Citi’s Mexico Sale Has Finance Minister on Antitrust Alert
(Bloomberg) -- Mexico will ensure that Citigroup Inc’s sale of its retail business doesn’t lead to market concentration in the country’s banking industry even if that means changing a potential deal, Finance Minister Rogelio Ramirez de la O said.
“This isn’t the first time that an entity that wants to sell has to reduce some of their sales or adapt or adjust so that they remain within regulation,” Ramirez de la O said by telephone on Wednesday. “It’s premature to say anything specific about this topic but the government will be very alert.”
Citigroup announced Tuesday that it’s planning to exit its consumer, small-business and middle-market banking operations in Mexico amid a broader revamp by Chief Executive Officer Jane Fraser, who is overhauling the firm’s strategy. The lender will keep its institutional businesses in the country, and the exit could ultimately take the form of a sale or a public-market alternative, Citigroup said, adding it will be subject to regulatory approval.
Super Topic
Ramirez de la O said that parts of the bank sale could represent a market concentration issue, which he called a “super topic,” and that the exit process will likely be slow. “We need to be very rigorous in the process to make sure their exit complies with all the rules of Mexican regulation and fiscal laws,” he said.
Mexico’s antitrust regulator Cofece, which is an agency that’s independent from the federal government, declined to comment.
Itau BBA analysts expect Citi will pursue an initial public offering for its retail banking business, as regulators will likely have a hard time approving a potential acquisition by the nation’s incumbent banks.
Mexican Savers
In a second interview, the finance minister said he wanted to ensure Mexican savers that they wouldn’t suffer any repercussions from Citi’s sale and that it wouldn’t lead to branch closures by a new buyer.
“We want to send a message to account holders, to savers, that they can be confident that there won’t be a loss of assets,” Ramirez said. While Mexico can’t force a buyer to keep branches open “there are measures we can apply in terms of giving opinion and applying regulations.”
Mexico economists have recently lowered their growth estimates for last year and this year amid tight fiscal and monetary policy and uncertainty over the government’s agenda. But the minister said the sale isn’t related to the country’s economy, as some local media suggested, pointing to the fact that Citi will continue investing in corporate banking, including building a new tower for its headquarters.
“This has nothing to do with Mexico’s economy or its performance, or with the future, because their corporate bank will have more investment,” he said.
Economic Forecast
On the economy, Ramirez de la O added that he’s seeing different characteristics in activity than what he’d observed in the autumn, when his ministry presented the budget. However, the ministry is not yet changing its 4.1% growth estimate for this year. Bank of America recently lowered its 2022 forecast to 1.5% economic expansion.
The Finance Ministry said in a statement Wednesday that Fraser had informed Mexico about the decision on a previous visit to the country. Ramirez de la O told Bloomberg News he spoke with her about the decision around 10 days ago.
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