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Citigroup Seeks Deutsche Bank’s Mexico Unit to Escape Bureaucracy?

Story Highlights

After having announced plans to close the Mexican consumer banking business, Citigroup is looking for another opportunity in the country. 

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In a bid to avoid the tedious process of obtaining a new banking license in the country, Citigroup, Inc. (C) is planning to acquire Deutsche Bank AG’s (DB) Mexico unit, a report published by Bloomberg stated.

Citing people familiar with the matter, the report added that the deal is unlikely to see the light of day.

Citigroup has been operating in Mexico for a long time and considers the country to be its top institutional market outside the U.S.

With the acquisition of Deutsche Bank’s unit, Citigroup will be able to continue serving large corporations and wealthy clients in the Mexican market.

Although Deutsche Bank has been reducing its operations in Mexico, it plans to continue operating the brokerage business in the region.

Stock Rating

Earlier this month, Oppenheimer analyst Chris Kotowski maintained a Buy rating on Citigroup but lowered the price target to $93 from $100. The new price target implies 76.5% upside potential from current levels.

Overall, the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on eight Buys, eight Holds and one Sell. Citigroup’s average price forecast of $65.41 implies 24.2% upside potential to current levels.

Hedge Funds’ Activity

TipRanks’ Hedge Fund Trading Activity tool shows that confidence of hedge funds in Citigroup is currently Very Positive, as the cumulative change in holdings across all 36 hedge funds that were active in the last quarter was an increase of 57.4 million shares.

Takeaway

Citigroup scores a 9 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to outperform market averages. Further, the bank is benefiting from the rising interest rates environment, and its capital position remains resilient to economic downturns.

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