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Grupo Financiero Banamex

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Grupo Financiero Banamex S.A. de C.V. has its origins and is the owner of the Banco Nacional de México or Citibanamex (formerly Banamex). It is the second-largest bank in Mexico. The Banamex Financial Group was purchased by Citigroup in August 2001 for $12.5 billion USD. It continues to operate as a Citigroup subsidiary.

Grupo Financiero Banamex,
S.A. de C.V
Citibanamex
Company typeSubsidiary
IndustryFinancial services
PredecessorGrupo Financiero Banamex Accival
Founded2 June 1884; 140 years ago (1884-06-02)[1] as Banco Nacional de México (Banamex)
Headquarters
Mexico City
,
Mexico
Key people
Manuel Medina-Mora Escalante
(Chairman of the Board)
Ernesto Torres Cantú
(CEO)[2]
ProductsBanking, financial
RevenueIncrease US$ 18.3 billion (2010)
Increase US$ 1.7 billion (2010)
Total assetsIncrease US$ 58.4 billion (2011)
Number of employees
41,390 (2012)[1]
ParentCitigroup
Websitewww.banamex.com

History

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Banamex was formed on 2 June 1884 from the merger of two banks, Banco Nacional Mexicano and Banco Mercantil Mexicano, which had operated since the beginning of 1882.[3] The newly founded bank had branches in Mérida, Veracruz, Puebla, Guanajuato and San Luis Potosí, and opened a branch in Guadalajara. After the start of World War I, the French managers of the bank left Mexico. After 10 years, Agustín Legorreta Ramírez who served as acting president managed to revive the bank. Following its reorganization, the bank collaborated with Banco de Mexico and US government officials. By 1937, 36 out of 50 bank branches in Mexico were owned by Banamex.[3]

Banamex gradually introduced several financial product innovations to the Mexican market including the first credit cards in 1968[4] and an ATM banking system in 1972.[5] In 1977, Grupo Banamex was formed by merging the bank with its investment and mortgage assets.[3] Four years later, Banamex acquired the California Commerce Bank.[6]

 
Facade of the Banamex building located on the corner of Carranza and Palma streets in the historic center of Mexico City.

During a severe economic crisis in 1982, then Mexican president José López Portillo announced a major devaluation of the peso and nationalized all private banks in Mexico.[7] For the next nine years, Banamex operated as a government-owned national credit association. In 1991, Banamex was reprivatized and it established Grupo Financiero Banamex–Accival with the investment bank Acciones y Valores de México (Accival). It had 720 branch offices, 31,797 employees, assets of $26.2 billion and a customer base of four million people making it the largest financial group in Latin America at the time.[3]

As a result of the private credit aggressive expansion in Mexico, resulted in a strain of the bank's balance sheet (loan portfolio quality ratios and capitalization ratios). The December 1994 macro-devaluation of the Mexican pesos and the ensuing significant increase in domestic interest rates coupled with a dramatic economic recession, caused Banamex's and much of the rest of the privatized banks to essentially become insolvent.[3]

 
Banamex former logo used from the 1990s until 2016

In order to avoid the potentially catastrophic effects of generalized bank bankruptcies, the Ernesto Zedillo administration decided to rescue the troubled banks through a government fund (Instituto de Protección al Ahorro Bancario or IPAB, later called Fondo Bancario de Protección al Ahorro or Fobaproa). IPAB enticed the banks' shareholders to inject fresh equity into the banks by pledging to buy from the banks non-performing loans in a two to one (or in some cases greater) ratio with respect to the newly injected fresh capital in exchange for a long-dated government note with capitalized interest. Banamex eventually sold $_ worth of non-performing loans to IPAB, and its shareholders injected $_ of fresh equity. The combination of these measures coupled with a recovery of the Mexican economy helped clean up the bank's balance sheet.

From 1997 to 2001 Roberto Hernández Ramírez was the CEO.[8] In 1997, Afore Banamex was created to access the newly created private pension fund market.[9]

On 6 August 2001, Citigroup Inc. acquired Grupo Financiero Banamex-Accival for US$12.5 billion, which became Grupo Financiero Banamex.[10] This was the largest-ever U.S.-Mexico corporate merger. Grupo Financiero Banamex's operations were integrated with Citibank's relatively small existing Mexico business under the Banamex brand name.[3]

In October 2014, allegations were made that employees had taken millions of dollars in kickbacks from vendors. Authorities in Mexico and the United States are investigating the allegations. Citigroup encouraged Manuel Medina-Mora to resign.[11]

Subsidiaries

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A Banamex ATM in Puerto Vallarta

The following are subsidiaries of Grupo Financiero Banamex:

  • Banamex[3]
  • Accival[12]
  • Afore Banamex[9]
  • Seguros Banamex[12]
  • Arrendadora Banamex[13]
  • Operadora e Impulsora de Negocios[14]
  • Acción Banamex
  • Pensiones Banamex[15]
  • Fomento Cultural
  • Fomento Social[16]

Banamex USA

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After Citigroup's purchase of Banamex in 2001, Banamex decided to expand into the U.S. by opening a subsidiary in the country and creating Banamex USA. Most of the bank branches were located in the Southwest with branches in California, Texas, and Arizona. The U.S. subsidiary didn't last long though and was shut down in 2015 after a 6-year investigation into Citigroup's and Grupo Financiero Banamex' money laundering scheme by the U.S. Department of Justice.[17] This resulted in Citigroup having to pay a $140 million fine.[18]

See also

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References

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  1. ^ a b Banco Nacional de México, S.A. (2013). "Reporte Anual que se presenta de acuerdo con las Disposiciones de Carácter General aplicables a las Emisoras de Valores y a otros Participantes del Mercado de Valores respecto al ejercicio terminado el 31 de diciembre de 2012" (PDF) (in Spanish). pp. 6–7, 61. Retrieved 22 March 2014.
  2. ^ Grupo Financiero Banamex, S.A. de C.V. (2013). "Consejo de Administración" (PDF) (in Spanish). Retrieved 22 March 2014.
  3. ^ a b c d e f g "History of Grupo Financiero Banamex S.A". Funding Universe. Retrieved 6 July 2020.
  4. ^ Juliana Etcheverry (19 July 2017). "The advantages of local acquiring in Mexico". Latin America Business Stories. Retrieved 6 July 2020.
  5. ^ Bernardo Batiz-Lazo, J. Carles Maixé-Altés, Paul Thomes (23 November 2010). Technological Innovation in Retail Finance: International Historical Perspectives. Routledge. p. 108. ISBN 9781136884535. Retrieved 6 July 2020.{{cite book}}: CS1 maint: multiple names: authors list (link)
  6. ^ Mauro F. Guillén, Adrian Tschoegl (1 July 2008). Building a Global Bank: The Transformation of Banco Santander. Princeton University Press. p. 102. ISBN 978-1400828333. Retrieved 6 July 2020.
  7. ^ Jonathan Kandell (18 February 2004). "José López Portillo, President When Mexico's Default Set Off Debt Crisis, Dies at 83". The New York Times. Retrieved 6 July 2020.
  8. ^ "Roberto Hernández Ramírez". The Nature Conservancy. Retrieved 10 July 2020.
  9. ^ a b Simpson, Atoll (9 January 2017). "Afore Banamex's CIO: forging the way for Mexico's pension funds". Citywire. Retrieved 10 July 2020.
  10. ^ "Citigroup Inc. Pursuant to Rule 425 under the Securities Act of 1933". U.S. Securities and Exchange Commission. Retrieved 6 July 2020.
  11. ^ "Another Scandal Hits Citigroup's Moneymaking Mexican Division". The New York Times. 14 October 2014.
  12. ^ a b "Grupo Financiero Citibanamex, S.A. de C.V". Dun & Bradstreet. Retrieved 10 July 2020.
  13. ^ "Arrendadora Banamex S.A. de C.V. Org Aux De Credito (Mexico)". Emis.com. Retrieved 10 July 2020.
  14. ^ "Informacion Corporativa de Tarjetas" (in Spanish). Banamex. Retrieved 10 July 2020.
  15. ^ Gregorio Impavido (2007). The Mexican Pension Annuity Market. World Bank Publications. p. 5. Retrieved 10 July 2020.
  16. ^ "Fomento Social" (in Spanish). Banamex. Retrieved 10 July 2020.
  17. ^ "Citigroup Likely to Close Banamex USA". Stock Market Advice | Investment Newsletters - Profit Confidential. 1 June 2015.
  18. ^ "UPDATE 2-Citi to shut Banamex USA, pay $140 mln fine". Reuters. 22 July 2015 – via www.reuters.com.
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