As a part of CEO Jane Frazer’s continued move towards overhauling its strategy, Citigroup Inc. is planning to shut down its retail banking activities in Mexico, where it has the largest presence of branch networks.
As per Bloomberg News, the lender will continue its institutional businesses in Mexico. Citigroup said that the exit will be via sale or public market alternative and will be subjected to approval from the regulatory authorities.
According to Frazer, Mexico will remain an important market for Citi. The decision to exit from the retail business is aligned with the new strategies of the bank.
This move comes after last year when Frazer had announced that Citi would exit 13 markets across Europe and Asia as a part of simplifying Citigroup and focusing more on lucrative businesses. The units up for sale in Mexico have $44 billion in assets.
Citigroup shares rose to $67.72, up by 1 % in late trading, New York after the announcement. The stock advanced 1% in 12 months compared to 34% growth of the S&P 500 Financial index comprising 67 companies.
History of Citibanamex
In 2001, Citigroup paid $12.5 billion to acquire Mexico’s largest bank at that time, Grupo Financiero Banamex-Accival. This unit came under scrutiny later when several incidents of fraud were detected within its division by the lender.
Though investors pushed Citibank to exit its consumer operations in Mexico, where it was doing business as Citibanamex, Citigroup continued to offer consumer and small business loans from its vast branch network in the country. In 2016, it announced investing more than$ 1 billion in this unit over four years.
Until last year, when Citigroup was exiting its retail business elsewhere, CEO Frazer praised the Mexico retail business. Frazer is playing by the skills she honed over the years, including when she was the head of the Banks Latin America operations. In 2015 she led the bank to exit its retail banking and credit card operations in Argentina, Brazil, and Colombia.
Argentina was the first no U.S. branch to open in 1914. However, Fraser had argued that Citi would not be able to invest enough to achieve proper scale in these three Latin American countries.
Confidence in Mexico
Frazer promised that the bank would use these moves to simplify its operations in Mexico on Tuesday. She expects Mexico to get significant global investments and trade inflows and outflows in the coming years. According to her, Mexico is poised for cross-border capital market activities, and Citigroup will use its institutional operations to make material investments in the market-leading hub.
The lender has promised to share more information on the exit Friday when Citigroup reports its fourth-quarter earnings.
In a statement, Chief Financial officer Mark Mason said that the new strategy would refresh Citi and make the bank stronger and more focussed. The bank plans to focus on the higher returns institutional business with the competitive advantage and expertise.
