(Bloomberg) — Citigroup Inc.’s plan to exit retail-banking operations in Mexico pushed the government into damage-control mode on Wednesday 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.
Banamex, or Banco Nacional de Mexico, 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 wave of 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.
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, the finance minister, said the government would seek to make sure any sale does not break antitrust rules in the industry. He said the bank’s decision to exit isn’t related to the country’s economy, as some local media suggested, pointing to the fact that Citi will continue investing Mexico, including building a new tower for its corporate banking headquarters.
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