The IPO will involve taking Banamex shares to the public, allowing outside investors to purchase these shares and become part owners of Banamex.
US investment banking giant Citigroup Inc (NYSE:C) has revealed plans to pursue an initial public offering (IPO) for its Mexico business, Banamex. The bank intends to separate Banamex from its operations and offer Banamex shares to the public for the first time.
According to the advertisementBanamex, as a separate entity from Citigroup, will retain the various lines of business and services. They include credit cards, retail banking, consumer loans, residential mortgage lending, insurance, deposits, and a full suite of commercial banking products.
In addition, the business will be reported as part of Citi’s continuing operations until ownership drops below 50% of the voting share, at which point it will no longer be consolidated. Meanwhile, bank first announce It intends to leave the consumer sector in Mexico, which operates about 1,300 branches with more than 12 million retail customers, and about 10 million pension fund customers in 2022.
Citigroup said it expects the separation to be completed in the second half of 2024, with a public offering expected in 2025. Although the bank has not made a decision on the destination of the listing, a source familiar with the plan revealed that the dual listing is in the US and Mexico. can be possible.
By conducting the Banamex IPO, Citigroup aims to establish Banamex as an independent entity. This will allow Banamex to operate independently with its shareholders and possibly its own management team, focusing on the Mexican market.
Interestingly, Citigroup has invested a whopping $2.5 billion specifically to bolster Banamex’s digital and mobile banking capabilities. This investment signals Citigroup’s commitment to leveraging technology to improve the banking experience and meet the evolving needs of its customers in an increasingly digital age.
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The IPO will involve taking Banamex shares to the public, allowing outside investors to purchase these shares and become part owners of Banamex. The proceeds from the IPO will provide Banamex with additional capital to support its growth, expansion and operational needs.
Citigroup Chief Financial Officer Mark Mason stated that the bank’s decision would allow Citigroup to focus on its core operations with the potential to unlock shareholder value through an IPO. In addition, Mason explained that the gradual offering will enable Citigroup to resume a modest level of share buybacks in the current quarter.
Notably, share buybacks are a process by which a company buys back its shares from the market, which can benefit shareholders by increasing the value of the remaining shares. Many companies including Apple Inc (NASDAQ:AAPL) are known to have an aggressive stock buyback program.
However, Mason’s statement also acknowledges the uncertainty surrounding regulatory capital requirements, noting that the company “…will continue to evaluate share repurchases on a quarterly basis, taking into account regulatory issues as well as any adjustments or updates that may arise.”
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