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Since January 11, much ink has been spilled over Citi’s decision to exit the consumer and corporate banking businesses in Mexico. Some arguments revolve around the poor management of Citi and others in the sense that the current government does not generate trust or provide the conditions for it. In these senses, some argue that it is the first of the foreign banks to come out in the face of what they call chaotic economic management, others more than that Citi has followed this strategy in Asia and Europe and it is part of its business model.

Others point out that Citi’s departure is due to the fact that it has not been able to manage risk and internal fraud (Oceanography within them), as well as the lax and inefficient controls in the face of the new provisions in the amendments to the Money Laundering Law that occurred in 2021 in the United States. Others assure that having made such a hasty announcement is due to the fact that there are issues that the American authorities have fined them, more significant than those they have had in past years, and that would send profitability and reputation to a significant deterioration.

I would not like to specify in this space all the journalistic notes supporting the arguments. Citibanamex’s decision —undoubtedly highly analyzed by the Bank’s Board of Directors— gives rise to a lot of speculation and different types of theories, however, the objective of these lines is to raise the relevance of how strategic it is for the financial sector, not only for banking because the way in which the sale of such an institution is carried out will have an impact on the redesign of the system so that it promotes the development of the country in the best way, in accordance with the plan that has been drawn up to accelerate it.

Consequently, it would be very important to know the result of the analysis that the Ministry of Finance and Public Credit (SHCP) is surely doing, supported by the National Banking and Securities Commission (CNBV), to know the details of how the objectives of financial inclusion, economic competition and focus on strategic and priority sectors to decide which position or proposal to support.

The development of the mapping of regions, sectors and strategic areas that must be supported is part of a broader public and regulatory policy and goes beyond what a single institution can do, but much emphasis has been placed on the fact that what remains in the hands of of nationals, could support that the focus, interest and commitment would be greater than that of foreign hands.

in-depth review

On this, it is worth reviewing to see which entities (domestic and foreign) have paid more dividends, which ones have reinvested more in operations in Mexico (in the case of foreigners) so as not to fall into a Manichaean view that by definition leads us to a hypothesis that foreigners only “take profit”.

Likewise, it is necessary to know which ones have best managed the risk, especially in cybersecurity and fraud issues; which ones have a higher customer satisfaction; who have been more willing to invest in important portfolios for the country, such as the agricultural, industrial or maquiladora sectors; which ones support medium and small companies more and not only corporate ones; which ones have cut credit lines more aggressively to their clientele after the pandemic and which ones have maintained their support.

It is also important to know which ones have more exposure in granting loans to the federal government, parastatal entities and state and municipal governments, as well as their entities, in addition to a series of indicators that are very relevant to know how to “draw” the financial system that we want to have, what behaviors we want to encourage and which ones the government is going to support at this time to accelerate its growth because they are considered ad hoc as the appropriate practice to promote growth with the leverage of the financial sector.

The line to follow… however

In general terms, the position of President Andrés Manuel López Obrador is summarized in: “Let it be Mexicanized; that whoever buys has the economic solvency to support customers; that they do not have tax debts with the SAT; that they pay taxes to Mexico and that the bank’s cultural fund be for the enjoyment and benefit of Mexicans”.

A number of questions arise about his position:

  1. Let them be Mexican. Do banks that are not linked to a parent company abroad, but whose shareholders are mostly foreign, qualify? Banks whose shareholders are concentrated in Mexican family groups could comply, but is it the healthiest thing to do? What has been your dividend payment history? What has been your commitment to your family group and to the institution that manages the population’s resources?
  2. Those who buy must have the financial solvency to support current and future customers. Economic solvency, measured in terms of the financial group, the family group, the interested entrepreneur, the industrial group? We are not going to end up buying like before with borrowed resources and crossings from one institution to another.
  3. That they do not have tax debts with the SAT. It means that if a group or financial institution had debts, but settles them prior to the offer, it would qualify. Where would you get the resources to pay the tax debts? Would this affect the assessment of your creditworthiness in point two? If you couldn’t pay them before, isn’t that an indicator of lack of commitment or solvency?
  4. That they pay the taxes to the public treasury. This point arises from the situation that in the past the Banamex transaction, for 12,000 million pesos, was exempt from taxes despite having been in that year (and in many years) the most relevant transaction on the stock market. It will depend largely on the form and structure of the sale which is determined by the current tax framework.
  5. That the Banamex Cultural Artistic Fund be for the enjoyment and benefit of Mexicans and that it not go abroad or remain as a private fund. On this point the president has also been quite repetitive. Even the Mexican foreign minister, Marcelo Ebrard, brought to the debate table the proposal that the Banamex Cultural Foundation be placed at the national disposal for its “preservation.” I believe that the proposal to maintain the artistic and cultural heritage and the collection that Citibanamex has today is well known and recognized and undoubtedly requires attention and a lot of maintenance. Will there be derived from point 4 a destination for this purpose?

In general terms, a question jumps out at me that I consider to be very important: If Citi were being forced to sell this segment of the business by the American authorities, who would buy it would not be acquiring a series of operations that are not “vaccinated” and that in the end would Would they lead to having an inherited operational structural problem and, consequently, the review by the authorities would fall on the new owner of the bank, who sooner or later could be disqualified or restricted in his operations with the United States?

Here just a few questions. I cannot disagree with the postulates presented by our president, nor with the sense that he wants to give about the sense of strengthening the financial system; My reflection is that we are falling short in all the approaches that could be made in terms of a public and economic policy that could be implemented at this juncture to achieve a more profound transformation for the well-being of the population. Today I think more questions will arise.

* Former Vice President of Regulatory Policy National Banking and Securities Commission.

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