MEXICO CITY, Might 26 (Reuters) – Mexican President Andres Manuel Lopez Obrador on Friday stated the federal government might purchase as much as half of the Mexican unit of Citigroup (C.N) after the U.S. financial institution introduced plans this week to pursue an preliminary public providing of the enterprise.
Citi stated Wednesday it was abandoning earlier plans for a sale of its Mexican unit, generally known as Banamex, for an IPO, prompting Lopez Obrador to announce that the federal government might spend money on the enterprise and had as much as $3 billion to take action.
The president, who stated the federal government had anticipated to earn round $2 billion in taxes from the estimated $7 billion sale of Banamex, returned on Friday to the potential of taking a big stake alongside Mexican shareholders.
“If the federal government places up half, or $3 billion, that leaves $2 billion for Mexican shareholders of all ranges,” he stated throughout a daily press convention. “It might repay,” he added, pointing to Banamex’s annual income.
The feedback adopted feedback from the Mexican authorities shortly earlier than the IPO plan was introduced that it was learning the potential of buying a “majority of (Banamex’s) shares…by means of the creation of a public-private affiliation.”
The president didn’t make clear Friday how the federal government would aquire its stake, however underlined Citi must pay tax on a public providing, noting: “The Mexican authorities is at all times going to have the best to find out the situations.”
It’s unclear what tax invoice Citi might truly face. The sale had appeared primed to understand a loss, as Citi purchased Banamex within the early 2000s for $12.5 billion.
Lopez Obrador additionally talked up the utility of getting a state-owned financial institution, and talked about the Banco de Bienestar (Welfare Financial institution), a government-run physique which helps course of welfare funds and has over 2,000 bodily branches, in line with official knowledge.
A financial institution might permit the federal government to obtain, acquire, and disperse funds, he famous, and floated the concept of the Banco de Bienestar having a “digital platform”, with out elaborating.
STAYING IN MEXICO
Previous to Wednesday’s announcement, Citi had been in superior talks to promote Banamex to Mexican billionaire German Larrea’s conglomerate Grupo Mexico (GMEXICOB.MX), sources stated.
Tensions flared up after Lopez Obrador moved final Friday to expropriate a part of considered one of Grupo Mexico’s railway traces.
Questions over how an IPO would work now abound, together with the place an inventory would occur.
Lopez Obrador stated Friday he had seen Citi communications saying it needs Mexican shareholders for the unit.
Citi might checklist solely in Mexico, although sources instructed Reuters it was additionally contemplating a twin inventory itemizing, presumably in Mexico Metropolis and New York, with 2025 circled as almost definitely.
Reporting by Isabel Woodford
Modifying by Alistair Bell