Citi acquires Deutsche Bank’s Mexico license

Dive Brief:

Citi has acquired Deutsche Bank’s Mexican banking license as part of its bid to set up a separate institutional bank in the country, Bloomberg reported Monday.
The license will help Citi separate the bank’s institutional and private business from its consumer, small-business and middle-market operations in Mexico, a company representative told the wire service. Financial terms of the deal were not disclosed.
Citi wants to list Banamex in an initial public offering in 2025 — an abrupt turnaround from the bank’s earlier plan to sell its Mexico retail operations. Citi abandoned those plans in May.

Dive Insight:

Citi’s purchase of Deutsche Bank’s license allows it to sidestep the lengthy process of applying for one on its own.

“This important step demonstrates our commitment to invest in and grow our leading institutional client franchise in the country,” Citi said in a statement seen by Bloomberg.

Citi first agreed to acquire Deutsche Bank’s Mexican banking license last year. But Mexican President Andrés Manuel López Obrador’s persistent opinions and conditions connected to a potential sale soured the deal.

López Obrador, in mid-2022, demanded that the sale wouldn’t result in mass layoffs, that it be backed by Mexican investors, that the buyer be current on its taxes, and that the bank’s art collection remain in Mexico.

Grupo Mexico, a conglomerate best known for its mining and railway operations, emerged as a front-runner early this year in a deal that would have been worth roughly $7 million.

But the deal reportedly fell apart after López Obrador seized control of a railroad line Grupo Mexico operated.

Fearing the same fate for Citibanamex — and upon hearing that López Obrador’s government was analyzing a potential bid for the bank if Grupo Mexico talks collapsed — Citi changed course.

Deutsche Bank began phasing out its retail operations in Mexico in 2016. However, it rebuilt its Mexico office last year, with an eye toward offering derivatives to corporate clients in the country, Bloomberg reported.