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BANKING

Mexico: Citi hangs on to Banamex

Agustin Carstens, the Mexican finance minister, has confirmed that Citi does not have to sell its Mexican unit, Banamex, following the US government’s investment in the US bank.

On March 20, Carstens said that Timothy Geithner, the US Treasury secretary, had reassured the Mexican authorities that the US government was only taking a temporary stake in Citi. Geithner also confirmed that the US government had no plans to influence the bank’s operations and that it hoped to relinquish its stake by 2012.

In March, the US Treasury propped up Citi after the bank’s share price collapsed. The Treasury converted $25 billion in preferred shares to common stock, giving the US government a 36% stake in Citi. In total, Citi has received $45 billion of US taxpayer-funded capital since October.

Since the bailout, speculation has been rife that a Mexican law that prohibits locally operated banks being owned by foreign governments would be violated. During a TV interview on Mexico’s Televisa channel at a Mexican banking convention in Acapulco, Carstens said: "Foreign government aid programmes don’t violate Mexican law... We are living through an exceptional, transitory, temporary period. The assistance of the US to Citigroup is helping Banamex."