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Citigroup's (C) Mexican Arm Banamex to Separate by Late 2024
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Citigroup Inc. (C - Free Report) will split its Mexico retail unit, Banco Nacional de México (“Banamex”), from its corporate and investment banking business in the country by the second half of 2024. This was reported by Reuters that cited the bank’s Mexico head, Manuel Romo.
Management also expects to begin the process of going public in 2025. Markedly, in January 2022, Citigroup revealed plans to exit Banamex, its consumer, small business and middle-market banking operations in Mexico, by separating the business in 2024, followed by an IPO in 2025. Now, the company has provided more clarity on the timeline and expects the separation to happen in the second half of 2024.
Earlier this year, the Wall Street biggie cancelled a $7-billion sale of the unit.
Per Reuters that cited people familiar with the matter, the company had been in discussion with Mexican billionaire German Larrea's Grupo Mexico to divest the unit. However, the Mexican government's interference resulted in both companies abandoning the deal.
While the retail unit will be separated, the bank’s corporate and investment banking operations will continue operating in the country under the name Citi Mexico.
The Reuters article quoted Romo, "We're making progress in a timely manner in the separation." He continued, "So that by the second half of 2024, the split between Banamex and Citi Mexico is complete."
The move is in line with the bank’s efforts to exit its consumer banking business in 13 international markets across Asia and the EMEA, and focus on growth in the wealth management and personal banking space. The company has closed sales in nine markets — Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand, Vietnam and Indonesia. It is also ahead of its plans to gradually wind down the consumer banking business in South Korea.
In October 2023, Citigroup agreed to sell its China-based onshore consumer wealth portfolio to HSBC Holdings plc. The bank will also wind down its U.K. retail banking business, and expand personal banking and wealth management businesses in the region.
Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the U.A.E. and London to stoke growth. The company anticipates the release of $12 billion (in aggregate) of allocated tangible common equity over time from such market exits. These efforts will likely help augment its profitability and efficiency, and optimize its capital over the long term.
C shares have gained 3.5% in the past six months compared with the industry’s rise of 16.1%.
BOK Financial Corporation (BOKF - Free Report) announced the sale of its risk management and employee benefits insurance brokerage and consulting business — BOK Financial Insurance, Inc. — to USI Insurance Services.
BOKF expects the transaction to result in a pre-tax gain of $28 million post-transaction-related expenses. The bank intends to use this gain to realize an equivalent loss on its available-for-sale securities portfolio and will rotate into higher-yielding securities. This will result in a net benefit to BOKF’s recurring earnings in the upcoming years.
Cadence Bank (CADE - Free Report) closed the sale of its insurance business, Cadence Insurance, Inc., to Arthur J. Gallagher & Co. (AJG - Free Report) in a cash deal worth $904 million. The amount is subjected to certain customary purchase price adjustments.
The deal between CADE and AJG was announced on Oct 24, 2023, and was expected to have a positive impact on CADE’s earnings per share. The company projected the transaction to result in an immediate net capital increase of $620 million and net cash proceeds of $650 million. Both estimations are made on an after-tax basis.
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Citigroup's (C) Mexican Arm Banamex to Separate by Late 2024
Citigroup Inc. (C - Free Report) will split its Mexico retail unit, Banco Nacional de México (“Banamex”), from its corporate and investment banking business in the country by the second half of 2024. This was reported by Reuters that cited the bank’s Mexico head, Manuel Romo.
Management also expects to begin the process of going public in 2025. Markedly, in January 2022, Citigroup revealed plans to exit Banamex, its consumer, small business and middle-market banking operations in Mexico, by separating the business in 2024, followed by an IPO in 2025. Now, the company has provided more clarity on the timeline and expects the separation to happen in the second half of 2024.
Earlier this year, the Wall Street biggie cancelled a $7-billion sale of the unit.
Per Reuters that cited people familiar with the matter, the company had been in discussion with Mexican billionaire German Larrea's Grupo Mexico to divest the unit. However, the Mexican government's interference resulted in both companies abandoning the deal.
While the retail unit will be separated, the bank’s corporate and investment banking operations will continue operating in the country under the name Citi Mexico.
The Reuters article quoted Romo, "We're making progress in a timely manner in the separation." He continued, "So that by the second half of 2024, the split between Banamex and Citi Mexico is complete."
The move is in line with the bank’s efforts to exit its consumer banking business in 13 international markets across Asia and the EMEA, and focus on growth in the wealth management and personal banking space. The company has closed sales in nine markets — Australia, Bahrain, India, Malaysia, the Philippines, Taiwan, Thailand, Vietnam and Indonesia. It is also ahead of its plans to gradually wind down the consumer banking business in South Korea.
In October 2023, Citigroup agreed to sell its China-based onshore consumer wealth portfolio to HSBC Holdings plc. The bank will also wind down its U.K. retail banking business, and expand personal banking and wealth management businesses in the region.
Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the U.A.E. and London to stoke growth. The company anticipates the release of $12 billion (in aggregate) of allocated tangible common equity over time from such market exits. These efforts will likely help augment its profitability and efficiency, and optimize its capital over the long term.
C shares have gained 3.5% in the past six months compared with the industry’s rise of 16.1%.
Image Source: Zacks Investment Research
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Divesture Moves by Other Companies
BOK Financial Corporation (BOKF - Free Report) announced the sale of its risk management and employee benefits insurance brokerage and consulting business — BOK Financial Insurance, Inc. — to USI Insurance Services.
BOKF expects the transaction to result in a pre-tax gain of $28 million post-transaction-related expenses. The bank intends to use this gain to realize an equivalent loss on its available-for-sale securities portfolio and will rotate into higher-yielding securities. This will result in a net benefit to BOKF’s recurring earnings in the upcoming years.
Cadence Bank (CADE - Free Report) closed the sale of its insurance business, Cadence Insurance, Inc., to Arthur J. Gallagher & Co. (AJG - Free Report) in a cash deal worth $904 million. The amount is subjected to certain customary purchase price adjustments.
The deal between CADE and AJG was announced on Oct 24, 2023, and was expected to have a positive impact on CADE’s earnings per share. The company projected the transaction to result in an immediate net capital increase of $620 million and net cash proceeds of $650 million. Both estimations are made on an after-tax basis.