Citi May Be Forced to Sell Banamex: Report
NEW YORK (
) --
Citigroup
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could be forced to sell its Mexican subsidiary since the U.S. government's bailout of Citigroup put
Banamex
in breach of national law, a report says.
The law bans foreign governments from owning a stake in domestic banks. Mexico's Supreme Court is meeting this week to investigate the case, the
Financial Times
reports.
Banamex, Mexico's second-largest bank, accounts for about 15% of global Citigroup profits, the newspaper reports, and is estimated to be worth at least $20 billion.
The
Financial Times
notes that other companies, including
AIG
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,
Bank of America
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and
Bank of New York Mellon
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, could be affected by this case since they have received U.S. funding and have operations in Mexico.
In March, Mexico's finance ministry passed a ruling stating that Banamex's status was acceptable because the U.S. government's stake was circumstantial and transitory. But senators in Mexico want the country's Supreme Court to decide whether that ruling is constitutional, the
Financial Times
reports.
If the decision goes against the ministry it coild end in legislation and force Citigroup to sell a stake of Banamex or even all of it.
"The Mexican ministry of finance has concluded that we are in compliance with Mexican law," Citigroup told the newspaper. The bank also said its goal is to repay the funds it received from the U.S. government's Troubled Asset Relief Program "as soon as possible, and that will put the entire issue to rest."
Meanwhile, it was reported last week that Citigroup was studying the possibility of holding an initial public offering for its entire Latin American division, which includes Banamex and
Citibank SA
, the bank's Brazilian unit.
-- Reported by Joseph Woelfel in New York
.
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