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Citigroup Undergoes Strategic Restructuring

Global investment bank Citigroup (NYSE: C) plans to exit the consumer, small business, and middle-market banking operations of Citibanamex, its banking business in Mexico.

As part of its strategic plan, the bank will exit its non-core businesses, including 13 markets across Asia and EMEA. Markedly, these exits are anticipated to release about $7 billion of allocated tangible common equity over a period of time.

Details of the Exit 

After acquiring Banamex for $12.5 billion in 2001, Citigroup made significant investments in the business to enhance its digital and mobile banking capabilities, strengthen its technology infrastructure, modernize branch and ATM networks, establish strong relationships with key customer segments, and advance its financial inclusion efforts.

Citigroup will continue to operate a locally-licensed banking business in Mexico through its global Institutional Clients Group. Notably, Mexico has remained one of the bank’s top institutional markets outside the U.S. Citigroup will continue to grow these institutional banking operations, along with its Private Banking franchise. 

The timing of the exit awaits regulatory approvals in the United States and Mexico. 

Official Comments 

Citigroup CEO Jane Fraser said, “The decision to exit the consumer, small business and middle market banking businesses in Mexico is fully aligned with the principles of our strategy refresh – we’ll be able to direct our resources to opportunities aligned with our core strengths and competitive advantages, focus on businesses that benefit from connectivity to our global network, and we will further simplify our bank.” 

“Mexico is a priority market for Citi – that will not change. We expect Mexico to be a major recipient of global investment and trade flows in the years ahead, and we are confident about the country’s trajectory,” Fraser added. 

Wall Street’s Take 

Recently, Jefferies analyst Ken Usdin maintained a Buy rating on Citigroup but reduced the price target to $80 (19.21% upside potential) from $87. 

The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 8 Buys and 7 Holds. The average Citigroup price target of $79.33 implies 19.21% upside potential. Shares have gained 3.4% over the past year. 

Citigroup is expected to release its upcoming earnings report for the fourth quarter of 2021 on January 14. 

Bloggers Weigh In  

TipRanks data shows that financial blogger opinions are 88% Bullish on C, compared to a sector average of 71%.

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