Citigroup's Mexico bank head denies sale reports

[February 17, 2009]  MEXICO CITY (AP) -- The head of Citigroup's Mexican bank on Monday denied reports that the troubled U.S. institution plans to sell Banamex to streamline operations and pare losses at home.

Banco Nacional de Mexico, known as Banamex, is part of Citigroup Inc.'s "strategic plan" for the future and will maintain lending levels despite Mexico's slowing economy, CEO Enrique Zorrilla told reporters.

"We're in the most important emerging market for the U.S. and (Citigroup) has mentioned Banamex as the example to be followed in other countries," Zorrilla said.

Banamex's net profit dropped 28 percent to 13 billion pesos ($949 million) in 2008, he said, as rising unemployment and cooling growth boosted losses on loans.

Some 6.7 billion pesos ($486 million), or 7 percent, of consumer credit card loans were overdue at year's end, compared with 2.9 percent of total loans, Zorrilla said.

Banamex represents 90 percent of Grupo Financiero Banamex, which Citigroup acquired in 2001. It is Mexico's second-largest bank and one of New York-based Citigroup's most lucrative properties -- raising speculation it might be sold to shore up capital for its parent.

Citigroup, hit hard as the subprime mortgage crisis spiraled in the U.S., reported a fourth-quarter loss of $8.29 billion in January, and it split into two entities to separate retail banking from its brokerage.

Still, Citi "has no intention" of selling Banamex, "a strong performing business that is a very complementary fit within our long-term strategic growth plans," spokesman Jon Diat said on Friday.

Citing unnamed sources, the Wall Street Journal that day reported that Citi was considering the sale if its financial position further deteriorated.

Citigroup CEO Vikram Pandit plans to visit the bank's operations next week to confirm Citi's "intention of keeping Banamex as a central part of its strategy," Banamex's director of legal and institutional development, Javier Arrigunaga, said Monday.

Banamex's net worth, defined as the difference between assets and liabilities, was 140 billion pesos ($10.2 billion) at year's end, while reserves were 30 billion pesos ($2.2 billion), Zorrilla said.

Mexico's banking sector, a veteran of past crises that required their own massive bailouts, was not exposed this time to as many toxic assets as U.S. and European banks, insulating it to a degree from the huge financial losses seen in other countries.

Even so, Mexico, which sends about 80 percent of its exports to the U.S., is now inching toward its own recession, with growth shrinking at an annual rate of 1 percent in the fourth quarter as the U.S. downturn slashed exports and decreased money sent home by migrants.

[Associated Press; By OLGA R. RODRIGUEZ]

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