The five Mexican banks listed on the Mexican Stock Exchange lack the financial capacity to buy Citibanamex’s corporate and consumer banking businesses, so there is a greater chance that an international financial institution will be the new owner, analysts said.
“Due to issues of liquidity, available capital and size, we see it difficult for a local bank to compete in the bid for Citi’s portfolio, so we expect it to be acquired by a large foreign bank,” said Carlos Gómez, an analyst at Intercam Casa de Bolsa.
The specialist did not rule out the interest of foreign banks and even a group of local investors to buy the portfolio for sale of the retail business of the financial institution in Mexico.
Jacobo Rodríguez, director of Financial Analysis at Black Wallstreet Capital (BWC), agreed that the potential buyer could be “an international financial group because they have sufficient resources to acquire Citibanamex’s retail banking business, unlike a local one.” .
Together, the six banks listed on the Mexican stock market reach a capitalization value of 40,709 million dollars.
But if other players such as Grupo Elektra are included, which has Banco Azteca and Afore Azteca among its businesses, and the finance company Gentera, which is also listed on the Stock Exchange, then the market cap of these seven issuers in the financial sector amounts to 58.3 billion euros. Dollars.
The largest is Grupo Financiero Banorte, with a market value of 20,927 million dollars. It is followed by Elektra with 16,514 million dollars and Banco Santander with 7,931 million dollars.
Below are Grupo Financiero Inbursa, which is worth 7,756 million dollars on the stock market; Banco del Bajío, 2,345 million dollars; Regional, 1,750 million dollars and Gentera, 1,077 million dollars.
Bank of America Global Research estimated that Citibanamex would be worth between $12.5 billion and $15.5 billion.
Jacobo Rodríguez believed that with Banorte as buyer, the concentration of the Mexican banking business would be affected, for which he stressed that Brazilian banks would be likely “bidders”, such as Itaú Banco, since they have sufficient resources to carry out an operation of this size. and, in addition, in recent years they have sought to enter this market.
“I would rule out that one of the large financial groups in Mexico could buy the business for sale from Citibanamex due to issues of market concentration,” reiterated Jacobo Rodríguez.
“We would not be surprised to see Itaú Unibanco as a potential buyer, perhaps even Bradesco. However, we believe that banks already operating in Mexico are much more likely to consider the significant opportunities for cost synergies, not to mention the higher income tax regime of Brazilian banks,” he said.
HSBC or Inbursa, the latter owned by Carlos Slim, are also players that could be interested in buying.
For now, who has already turned to see this business that is worth more than 40,000 million dollars is the businessman Ricardo Salinas Pliego, owner of Banco and Afore Azteca, since he has the resources for an eventual acquisition.
“It makes sense for Grupo Elektra to acquire the business portfolio, the Afore and the property business. Ample opportunities for synergies are seen by closing branches. In his case, competing more strongly with Banorte”, considered Enrique Mendoza, an analyst at Actinver Casa de Bolsa, who ruled out BBVA from the bid due to market concentration issues.
However, he stressed that the potential buyer could be a Brazilian bank, which would “warm up” the competitive environment for local banks.
Among the most likely local candidates that the Actinver analyst pointed out to acquire Citibanamex’s two businesses are Banorte, Santander and Scotiabank, as it would be a strategic acquisition to expand its deposit base, consumer and corporate portfolio. With less potential, he sees HSBC and Inbursa.
“The Slim family is not inclined to make onerous acquisitions (high multiples will surely be paid in the transaction). In addition, the strategies do not sound very complementary”, said Valentín Mendoza.
Citibanamex is the third largest bank in Mexico. Its total portfolio was 551,091 million pesos, which is equivalent to 12.24% of the national credit market. It has assets of 1 billion 433,851 million pesos, deposits of 893,012 million pesos and stockholders’ equity of 180,318 million pesos.
While Afore Citibanamex manages 833,000 million pesos and has 9.6 million clients. It is the third largest in the system, ahead of it are Banorte and Profuturo, show data from Consar.
Bank shares rise
The shares of banks listed on the BMV ended this Wednesday with advances of between 3 and 4 percent.
Regional led the gains, with 4.26%; Banco del Bajío 3.56%, Banorte rose 3.37% and Inbursa 0.49 percent. Grupo Elektra finished with an advance of 3.56 percent. In negative territory, the price of Gentera (-0.79%) and Banco Santander (-0.04 percent) ended.
Manuel Zegbe, stock analyst at Signum Research, explained that Banorte, Banco del Bajío and Regional shares appreciated yesterday because they could benefit from the sale of Citi’s retail business in Mexico.
He added that “there is appetite from the banks, although they have not confirmed anything. Banorte can buy, since its portfolio has grown inorganically with the purchase of Interacciones, so this operation would not be something new”.
Eduardo López, an analyst at Bx+, explained that this year “is looking to be better” for the BMV banks because with less uncertainty, there is room to grow their portfolios, after two consecutive years of declines in said item. This year, Banorte gains 11.12%, Banco del Bajío 9.05% and Regional 2.35% on the Stock Exchange.