Print this article

Citigroup May Be Forced To Sell Mexican Bank Subsidiary - Report

Tom Burroughes

19 October 2009

Citigroup could be forced to sell its profitable Mexican subsidiary, Banco Nacional de Mexico, or Banamex, as Mexico's Supreme Court is set to probe a case against the US bank, the Financial Times has reported.

A group of opposition senators has said that the US government bailout of Citigroup last year placed Banamex in breach of Mexico's national law, which bans foreign governments from owning a stake in domestic banks.

In Europe, Germany’s Commerzbank has been forced under European Union laws to sell off its non-domestic assets as a condition receiving state aid.

In March, Mexico's finance ministry had passed a ruling, stating that Banamex's status was acceptable because the US government's stake in the financial institution was circumstantial and transitory, the newspaper said.

The ruling suggested that equity stakes acquired by foreign governments in the parent companies of Mexican banks due to the global financial crisis were consistent with Mexico's banking law and the treaties signed with other countries. However, the opposition senators have said they want the Supreme Court to decide whether that ruling is constitutional.