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Friday, 18 May, 2001, 05:53 GMT 06:53 UK
Citigroup to buy Mexican bank
Citigroup website
Citigroup is taking advantage of closer links between the US and Mexico
The US banking giant Citigroup is to buy the number two finance house in Mexico, Banacci - or Grupo Financiero Banamex-Accival, for $12.5bn (8.7bn).

I don't think there is any question that enormous reform efforts have won Mexico great respect

Robert Rubin
The deal, which is described as the largest ever in an emerging market, marks the first ever major acquisition in Mexico by a US bank.

Linking the two banks will create a Latin American finance house that is bigger than any of its rivals in the region.

Citigroup says it wants to take advantage of the growth in business dealings between Mexico and the US.

"This combination positions both Banacci and Citigroup to capitalise on this important trend, and thus is a natural next step for both our companies," said Citigroup's chairman and chief executive Sanford Well.

The move also aims to attract the large and growing Hispanic population in the US, many of whom are familiar with Banacci's retail bank brand Banamex.

Citigroup's board member Robert Rubin, who was treasury secretary in the former President Clinton administration, said the group may open Banamex branches in the US.

International links

Ahead of the Citigroup deal, Banacci was the last major Mexican bank without a foreign partner.

Mexico's banks have struggled to recover from a financial crisis during the middle of the 1990s which sent interest rates soaring and forced the government to intervene.

A $100bn rescue package was soon followed by economic reform and the increased internationalisation of Mexican banking.

Two major deals were done with foreign banks, as Grupo Financiero Bancomer merged with Spain's Banco Bilbao Vizcaya Argentaria, and as Grupo Financiero Serfin was snapped up by Spain's Banco Santander Central.

"I don't think there is any question that enormous reform efforts have won Mexico great respect," Mr Rubin said.


The deal aims to save $200m a year.

Under the terms of the agreement between the two finance houses, Banacci shareholders will receive $6.25bn in cash and $6.25bn in shares, based on last Friday's closing price of $49.26.

If it is approved by US and Mexican regulators, Citigroup will become the first foreign listing on Mexico's stock exchange.

Citigroup's shares fell 97 cents, almost 2% on Thursday to $50.82. Banacci's shares rose 30% to 22.61 pesos ($2.47).

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03 Apr 01 | Business
Citigroup to lay off staff
16 Jan 01 | Business
Profit drop at Bank of America
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