January 12, 2022 | 5:00 am
By Elizabeth Albarrán and Italia López
The recent announcement of Citigroup about his exit and sale of the business of financial services as the consumer banking, represents an opportunity to improve competence in the system Mexican banking.
Of the 51 commercial banking institutions registered by the National Banking and Securities Commission (CNBV), only four concentrate 61.28% of the total assets that were 11.71 trillion pesos at the end of November 2021.
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Is about BBVA, Santander, Banamex and Banorte, which reported a total of assets of 7.17 billion pesos. Banamex registered a total of 1.43 trillion pesos, that is, it concentrates 12.24% of total assets.
Jorge Sánchez Tello, director of applied research of the Foundation for Financial Studies (Fundef), commented that the Buying Banamex requires an interested party with great economic power, but to avoid a greater concentration in the sector, it probably won’t be given to one of the banking giants.
I think that the possible candidates for them to buy a business like this will have to be someone or new to the banking system, or whether they come from Mexico or abroad, but give priority to generating more competition
expressed in an interview.
For Mario Di Costanzo, independent financial advisor, the sale of Citi should be seen as an opportunity to diversify banking in Mexico, especially to reduce the foreign party.
I believe that Mexican banks should take advantage of this opportunity to gain more ground within the national banking system (…) it would be regrettable if this portfolio were to remain in the hands of Santander or BBVA
The former president of the Condusef, indicated that Banca Mifel could be a good candidate to acquire the Citi portfolio, but it will depend on whether they are interested in expanding and having the authorization of the CNBV, Hacienda and Banco de México; as well as the opinion of the Cofece.
Ricardo Salinas Pliego raises his hand
With the exit of Citi from the retail business in Mexico, these operations could also be in the hands of a player with a smaller market share in the sector, such as Ricardo Salinas Pliego, owner of Banco Azteca.
At the end of November 2021, Banco Azteca’s total assets were 255,579 million pesos, which represented 2.18% of the total banking system.
Through his Twitter account, the businessman said that he asked his team to analyze the convenience of acquiring the set of businesses that will be put up for sale and that include those related to Credit cards, mortgage, business, insurance, outskirts, cultural heritage, branches, as well as the license and the Banamex brand.
I have always believed and invested in Mexico and the Mexicans. That is why I have asked my team to analyze the convenience of acquiring @Citibanamex and redouble my bet on Mexico, the Mexicans and their future. ????????#HaveToLearn ✌???? https://t.co/99zZqy42b5
– Ricardo Salinas Pliego (@RicardoBSalinas) January 12, 2022
Although the offer has yet to be finalized and submitted to the approval of the National Banking and Securities Commission (CNBV), Salinas Pliego would have the opportunity to acquire these assets.
Banco Azteca, despite being an important player in the financial system, is not considered one of the big banks.
Sánchez Tello considered, prior to the confirmation of the Mexican magnate.
In this sense, he pointed out that the Afores section could face greater scrutiny by the authorities, since there are only nine private participants in the more afore sector PensionISSSTE, so a merger with another bank (such as Banorte, Coppel, Azteca or Inbursa) it would imply a greater contraction in supply.
However, he indicated that time must be given to the process, as it will surely attract many interested parties, which will also give signals about the confidence to invest in Mexico, “depending on how many are interested in Citibanamex.”
Meanwhile, Bernardo González, president of the Mexican Association of Retirement Fund Administrators (Amafore), He expressed through his Twitter account that the Citi announcement represents an opportunity for the bank to return to Mexican hands.
I hope that the sale of Banamex by Citi will allow that historic Mexican franchise to operate with greater versatility and without the great regulatory weight that the US authorities have imposed on the current one. @Citibanamex and as a pylon that it returns to Mexican investors.
– Bernardo González Rosas (@ BernardoGR77) January 11, 2022
Humberto Calzada Díaz, chief economist for Rankia LATAM, mentioned that among the names of interested parties that began to be shuffled, such as Salinas Pliego, Carlos Hank González (from Banorte) or the Brazilian bank Itaú, the highest bidder will win.
“I don’t think there would be problems, they would even benefit because they would strengthen their presence and weight in the country. The issue is who is going to be the highest bidder “
An attractive business
In the statement issued Tuesday, Citigroup affirmed that the sale of retail banking in Mexico obeys your strategy to focus on institutional banking and what happens after similar movements in Asia and Europe.
Jorge Sánchez Tello commented that although in the case of operations in Mexican territory it is striking that they are detached from businesses that are profitable for them as a group – in the first three quarters of 2021, they contributed close to 3.5 billion in income – it should be taken calmly.
“Citibanamex is one of the main banks in the country and Citigroup, taking advantage of the fact that they are leaving several countries, that in Mexico it is a profitable business and that it is a good time to find a buyer, they are taking advantage of it to sell it,” he said.
He mentioned that despite the economic impact of the pandemic in 2020, the banks did not collapse, as happened in other financial crises, but in general they remained strong and that there is still room for the loan portfolio to grow, so it is good business have a bank in Mexico.
Humberto Calzada agrees on the attractiveness of the institution that begins a sales process that could take several months.
“It is attractive, because after Bancomer, it is the second largest financial group in the country, so it can be an attractive business for the next group that decides to acquire the commercial part, the consumer part and business banking, in that sense I think I would be acquiring a good business, “he said.