Citigroup said it would spin off its Mexican retail banking business through an initial public offering, abandoning a plan to sell the unit that it made early last year.
The U.S. bank plans to completely spin off its Banamex unit, which employs 38,000 people and is one of Mexico’s largest consumer banking franchises, by the middle of next year. An IPO by the unit is likely by the end of 2025, the bank said.
Citi executives have previously said they have been pursuing a dual process to exit Banamex and recently decided an IPO would be a better route for investors than a sale.
Chief Executive Jane Fraser, who is leading a broader plan to slim down Citi, said in a statement: “After careful consideration, we have concluded that realizing Banamex value for our shareholders The best way to maximize and advance our goal of simplifying the company is to move from our dual-path approach to a corporate-only IPO.”
The planned IPO marks the end of more than a year of efforts to sell the unit. As recently as February, the Financial Times reported that Citi was in exclusive talks to sell Banamex to a Mexican group owned by billionaire Germán Larrea. The deal is expected to value the unit at as much as $8 billion. It is unclear why or when those talks ended, or why the bank did not seek offers from other interested bidders.
On Wednesday, Citigroup did not say what it thinks Banamex could gain in the IPO.
In 2001, Citi bought Banamex, one of Mexico’s oldest and most prestigious banking brands, for $12.5 billion to much fanfare. But it has since fallen from the country’s second-biggest lender to fourth-biggest after struggling to compete in a market dominated by other foreign banks. Analysts and bankers said a litany of blame was to blame, including mismanagement and high costs, as well as constraints imposed by U.S. regulatory requirements.
Citigroup said on Wednesday it has invested $2.5 billion to upgrade the company’s “digital and mobile banking capabilities.”
The U.S. bank also announced Wednesday that it plans to resume share buybacks later in the quarter.