Banamex, Citi's branch in Mexico, was once a core pillar of the bank's operation into international markets. Bought in 2001 for what are now 20 billion dollars, Citi purchased this government-owned bank near the end of Mexico's rapid economic recovery from the late 1990s. It presented the attractive opportunity of buying what was the national bank of a major developing country for seemingly cheap. Today however, it sits at the center of a difficult and uncertain divestment process. What makes the situation particularly striking is not just the decision to sell, but the price investors appear willing to pay for one of Mexico’s most recognizable banking franchises. The first thing that should be highlighted about the story is the price. The major mining and infrastructure conglomerate Grupo México proposed in late-2025 a transaction consisting of acquiring 25% of Banamex at about 0.85 times book value and the remaining 75% at about 0.80 times book. Citi however, declined this offer. Instead, they agreed to sell only 24% to investor Fernando Chico Pardo for 2.5 billion dollars, implying a roughly similar overall valuation from the previous offer. However, with this valuation, Citi ends up losing more than half of the original value from 2001. The remaining shares (76%) would be offered on a future IPO planned for 2026 at the Mexican stock exchange. Compared with many publicly traded U.S. banks in late 2025 this is highly unusual because it represents a major discount. Reuters reported that U.S. bank shares were trading around 1.7 times book value, while even European banks were around 1.17 times book. Citi itself had improved to roughly around book value by late 2025 after years of trading below it. Against that backdrop, Banamex at 0.8x book looks clearly discounted. Compared with strong Mexican listed banks, the gap also looks large. Banorte, one of Mexico’s flagship banks, was generating a return on equity above 23% in early 2025 and market data showed it trading at well above book value. That does not mean Banamex should automatically trade like Banorte, but it does mean 0.8x book is low relative to a healthy, high-performing Mexican banking franchise. In fact, the average price-to-book multiple of all banks listed in the Mexican stock exchange is 1.53, almost double that of what was offered for Banamex. In other words, these facts demonstrate that Banamex has been valued by numerous investors like a bank with deep uncertainty. This redirects us to the financial problems that Citi has faced over the last couple of years, as Banamex has been proven to be a poorly valued asset.

Citi's recent weakness has not been about a lack of capital but about persistent operational and regulatory failures that have weighed on valuation and credibility. For example, in 2025, Citigroup reported net income of $14.3 billion compared to $11.46 billion in 2024, and at the time of writing this article their stock has increased by 53% over the past year. However, those results were still affected by Banamex-related charges, including a $726 million goodwill impairment in 2025 and a $1.2 billion loss on sale tied to the Mexico transaction in the fourth quarter. More importantly, Citi remains under pressure from regulators because it has taken years to fix weaknesses in risk controls, data governance, and internal reporting. As an example, in July 2024, the Federal Reserve and OCC fined the bank $136 million for insufficient progress on the consent orders first imposed in 2020, and subsequent reporting errors continued to reinforce the view that Citi’s biggest financial issue is not profitability in the short run, but whether management can finally repair the systems and controls of a bank that has long underperformed its peers, the big three (JPMorgan Chase, Bank of America and Wells Fargo).

For this reason, whether listing the remaining 75% on the Mexican Stock Exchange is a good idea is much less obvious than the 1.53 average price-to-book multiple initially suggests. On paper, that multiple could make an IPO look attractive. If Banamex were eventually valued closer to the broader group of listed Mexican banks rather than at the roughly 0.8x book implied by Grupo México’s offer, Citi could recover materially more value. The problem is that this comparison can be misleading, because those listed banks are already consolidated, profitable, and well understood by investors, whereas Banamex would come to market as a carved-out asset still associated with Citi’s restructuring, regulatory overhang, and years of sale uncertainty. That matters especially in Mexico. This is due to the fact that this stock exchange is known for struggling with shallow equity issuance, weak liquidity, and difficulty bringing large new issuers to market. Another fact which is that regulators pushed through stock-market reforms in 2024 to make listings easier is itself evidence that the market was not functioning well enough before. Recent cases reinforce that point, such as that one of the company Fibra Next, which had to halt its 2023 IPO, later revive it in 2025 at a much smaller fundraising target, and only then reach the market; Grupo Financiero Mifel had earlier pulled its own planned listing after failing to secure enough investor demand; and Aeroméxico (Mexico's largest airline) repeatedly delayed its return to public markets, ultimately looking to New York instead of relying on local conditions alone. With the context that the company faces, Banamex is far from a valuation like those of Banorte or Bajío, which are banks already established and absorbed by the market. Instead, it is in the uncomfortable situation in which the issuers face skepticism because investors are unsure how to price their shares. For that reason, an IPO could still produce a higher valuation than Grupo México’s bid, but since there is no clear superior option, it is an essential gamble on market depth and investor appetite. It is a gamble because its success depends on a series of variables that are themselves even more volatile, such as if national or international events will position Mexico's central bank to lower interest rates so that investors have access to more capital, whether in the next couple of months any of the competing banks face setbacks that Banamex could then take over, and more. In the end, it is clear that the speculation that Citi is facing regarding Banamex sets an uphill battle toward a successful and stable IPO, which is likely to determine its competitiveness against the big three.