The news that Citibanamex is selling 56% of its assets in Mexico, being highly profitable according to its numbers, is without doubt shocking information. It is known that in Mexico, it generated high profits. Currently, it is the third-largest bank in the country and has a high dominance in the consumer market (which is falling apart). According to the news, it keeps part of large capitals “which is its competitive advantage.”
Citi said they would leave Europe and Asia since last year, but in Poland and Russia they do not have a significant presence and from Asia, only China and South Korea stand out.
In my experience, several factors were considered in the decision:
a) The country is not growing as expected, and there is even a significant decline in the middle class. The origin of this has two important points. The first one is the the bad public policies of the current government that have caused a drastic break in the economy since they came to power. The second, the pandemic, also affects the lack of government support for the productive bodies, which caused many Small & Medium-sized Enterprises (PYMES) to flunk.
b) Since the current government started, foreign investments have had the worst figures. This also affects the previous points. Productive capitals that do not enter the country are being held back due to distrust in contract annulments. They change the rules. There is no trust in our legal system that has been rendered vulnerable (again) by the government we have. This point would affect the bank because it also impacts the country’s economy, less development, less money, etc.
c) Their assets only search for profitability on the safe side and less risk. Again, this is a business decision. Today they have branches, systems, employees who are high risks. Although it leaves them a good performance, they prefer to focus on another market niche that would be profitable without risk.
Due to this, Banamex will be sold, and other actors in the country will buy it by parts (mortgage portfolio, others of consumer banking, etc.).
Those who have accounts in this bank would not be affected even if they could change some things for the new companies that will absorb them.
For Times Media Mexico / The Yucatan Times
Irving Alberto Escalante Castillo
Irving Alberto Escalante is an accountant from the Autonomous University of Yucatán. He has a Master’s in business administration with a specialty in Finance from Tec Milenio University and over 20 years of experience in business projects, crisis management,, and corporate finance. He is a partner of CONSORCIO’s office in the Finance and Business division, Co-Founding Partner and Executive Director of the Institute of Tax Education IDET CONSILIUM, a training company specialized in legal and tax issues, patrimonial, and CEO of PROVIFIN. This financial linkage firm operates investment and direct loans to companies and business projects.
The Yucatan Times