Out of Mexico, Citi Ends Consumer Business Abroad

Out of Mexico, Citi Ends Consumer Business Abroad

NEW YORK.– Citigroup Inc. will end its overseas consumer banking business. Banks from the United States (US) has decided to exit the retail business in Mexico through Citinamex after serving consumer customers for 20 years.

The move is part of Citigroup Chief Executive Jane Fraser’s strategy to bring profitability to the bank. Also as an effort to raise stock prices in line with their peers.

Since last year, Fraser promised to simplify Citigroup by going out of non-core business. Including consumer franchises in 13 markets in Asia, Europe, Middle East and Africa.

“However, Citigroup will maintain its institutional client business in Mexico as in any other overseas market. For the consumer business, Citigroup will focus on the US credit market only, as well as pursuing its fortune for its global wealth management business and other financing businesses,” he said.

In fact, in 2001, Citigroup acquired bank Banamex for US$12.5 billion to enter the Mexican market. The transaction, which broke Mexico’s record at the time, came amid a wave of foreign purchases after the economic crisis devastated Mexico’s banking sector in the mid-1990s.

Citi’s exit made Citinamex the target of new investors. Mexican billionaire Ricardo Salinas Pliego with a net worth of US $ 15 billion said he was analyzing the possibility of acquiring Citinamex.

In addition, six large Canadian banks have excess cash and can be used to take over Citinamex. In fact, the Bank of Nova Scotia already has a sizeable Mexican business.

The Banco Santander and BBVA Overseas Branch Offices will also have cash on hand. Meanwhile, Mexican institutions Banorte and Inbursa have also sent signals of interest.

Odeon Capital analyst Dick Bove assesses that digitalization adaptation and poor risk management controls have put pressure on the banking industry.

He continued, Citigroup’s inability to fix operational problems and increase its share price has frustrated shareholders.

Fraser’s change is the biggest shake-up for Citigroup since it was forced to dismantle assets after the 2007-2009 financial crisis. To date the bank has cost US$2 billion to exit the Asian market.

Prior to becoming CEO, Fraser was responsible for the Mexican business and global consumer bank Citigroup. In that role he worked to build on investments the bank made to renew the Mexican consumer business that had become known as Banamex.

“By ditching the Mexican consumer business, we will be able to direct our resources towards opportunities that align with our core strengths and competitive advantages. Mexico remains a priority market for Citigroup’s institutional business,” Fraser said.

Business News