After Citigroup Inc. announced plans to sell its Mexican consumer banking business asset, analysts said domestic billionaires such as Carlos Slim and Ricardo Salinas Pliego were in the lead to buy the assets on sale.
In a statement, the Finance Ministry said it was observing the sale of Mexico’s number three bank for market concentration, the more established players in the country were not favored in the divestment.
According to Alejandra Marcos of Intercam Banco, Slim’s Inbursa, now Mexico’s seventh-largest bank, had the wherewithal to make a strong offer and would avoid the same obstacles as peer Grupo Financiero Banorte from regulators due to the size of the latter’s market share.
Mexican banks in bid for asset
Inbursa appeared to be the only Mexican bank with the financial capacity for the acquisition, however, the possibility of several individual entrepreneurs joining to make a bid could not be ruled out.
A spokesman for Slim declined a request for comment. Banorte too declined a comment.
The price tag of the Citigroup asset, possibly with a price tag of between USD 4 to 8 billion dollars, prompted Mexican tycoon Ricardo Salinas to instruct his team to study the purchase. Salinas is also the owner of supermarket and banking chain Elektra.
Mexico’s left-inclined government was not likely to encourage a buyer that would enhance the market power of top banks in the country, according to sources from the financial sector. Spain’s BBVA currently holds over 1/5th of the market share.
The sources said that it was possible that a Mexican successor to Citibanamex would be preferred, which also threw open the option of several buyers coming together to purchase the assets.
While mentioning that the banks assets represented one of the biggest banks in the country, Interior Minister Lopez stated that the Mexican government was not interested in purchasing the assets of Citibanamex.
In 2001, Citigroup had acquired Banamex for USD 12.5 billion, making it the largest-ever at the time. The acquisition was just part of a number of foreign acquisitions in Mexico after a mid-90’s economic crisis crippled the banking sector in the country.
Online lender Nubank, from Brazil, could also be interested in acquiring the asset, a source added. Nubank has been increasing efforts in Mexico recently and has a huge valuation, although the purchase would go against Nubank’s strategy of building assets from scratch, said the source.
Director of analysis and stock market strategy at Monex, Carlos Alberto Gonzalez was quoted as saying that an international bank just entering the Mexican market stood to gain 10% of market share through the acquisition, while a Mexican bank may find it hard to justify the acquisition to antitrust regulators.