(Bloomberg) — Citigroup Inc.’s plan to exit retail-banking operations in Mexico has pushed the government into damage-control mode to ease concerns in a country scarred by a financial crisis in the 1990s.
Finance Minister Rogelio Ramirez de la O sought to tamp down any negative reading on the economy from the potential sale, and he said the government would seek to limit the closure of any branches.
“We want to send a message to account holders, to savers, that they can be confident that there won’t be a loss of assets,” Ramirez told Bloomberg News on Wednesday.
Banamex, or Banco Nacional de Mexico, was formed back in 1884 and it was the country’s No. 2 bank when it was bought by Citi in 2001 amid a wave of acquisitions by foreign players of local banks that were devastated by the 1994-1995 “Tequila Crisis.”
Many Mexicans remember the bank failures that hit the country during the crisis. Some took to Twitter to comment on Citi’s exit and wondered about the future of their savings and pensions. The head of the country’s banking association ABM appeared on a top radio program to rule out any potential impact on Citibanamex clients, whoever ends up taking control.
“There is no reason to be worried,” Daniel Becker Feldman, ABM’s president, told radio host Joaquin-Lopez Doriga and delivered a similar message to other local media.
On Thursday morning, Interior Minister Adan Augusto Lopez told reporters that authorities were prepared to ensure a smooth transfer to new owners.
“This is not a withdrawal of operations from the country, because in any case, if the sale takes place, it will continue with other owners operating the Banco Nacional de Mexico,” he said during the government’s daily press conference.
Opponents of President Andres Manuel Lopez Obrador say Citi’s move is the latest sign his nationalist policies are scaring off investors. Even though Citi’s plan fits with the bank’s global strategy of exiting off-shore consumer operations, it follows moves by UBS Group AG to close its Mexican brokerage and JPMorgan Chase & Co to shutter its local wealth business.
Ramirez de la O, the finance minister, said the bank’s decision to exit isn’t related to the country’s economy or its future, as some local media suggested, pointing to the fact that Citi will continue investing in Mexico, including building a new tower for its corporate banking headquarters.
Read More: Mexico Economy Faces Gloomy 2022 as Growth Decouples From U.S.
Third Biggest
Citibanamex saw its market share whittled down to 12.9% of deposits from 22% in 2001, and is now the country’s third biggest deposit-taking bank, CNBV data show.
In the aftermath of the Tequila Crisis, Mexico’s banking sector became highly concentrated in the hands of mostly foreign-owned banks like Spain’s Banco Bilbao Vizcaya Argentaria SA and Banco Santander SA as well as HSBC Holdings PLC and the Bank of Nova Scotia.
Ramirez de la O told Bloomberg he would seek to make sure any sale does not break antitrust rules in the industry.
Read More: Citi’s Mexico Sale Has Finance Minister on Antitrust Alert
(Adds interior minister comments, details on other bank exits in paragraph seven to nine.)
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