Here’s the latest development in the peculiar saga that is the ongoing tussle over Citi’s Mexican subsidiary, Banamex.
From the FT:
Mexico’s Supreme Court is this week set to probe a case that could potentially force Citigroup, the troubled US bank, to sell its profitable and highly prized Mexican subsidiary.
A group of opposition senators has pointed out that the US government bail-out of Citi last year placed its Mexican subsidiary, Banamex, in breach of national law, which bans foreign governments from owning a stake in domestic banks.
Now in March, the Mexican government said Banamex didn’t break the law, since the rule about foreign ownership of banks didn’t apply in times of global crisis (really). So a change of tack now would either be down to Mexican political interests , or a tacit acknowledgement that the global financial crisis is over.
This isn’t a huge surprise of course — the government’s March ruling was only ever going to be temporary. But it does hint at coming trouble for Citi CEO Vikram Pandit — a man who’s already been under pressure to sell off Citi assets like energy trading arm and $100m-bonus maker, Phibro. Citi is still under federal constraints, since it hasn’t repaid the $45bn in Tarp monies it received from taxpayers last year.
What makes Banamex different to something like Phibro, however, is the importance which has been placed on the business by Pandit.
Here for instance, is a February 2009 quote:
“I want to make it very clear: Citi and Banamex are one and the same,” Pandit said at a Banamex conference in Mexico City today, according to a company statement. “The future of Citi is in emerging markets. It’s in Latin America. It’s in Mexico with Banamex.”
A backdown on Banamex would be embarrassing for Pandit, to say the least.
It could also be career-destroying for a man already limping his way through the financial crisis.
Related links:
Citi Mexicana – FT Alphaville
Bana-vexed – FT Alphaville
Citi, Banamex and the peso – FT Alphaville