NEW YORK (Reuters) -Citigroup has agreed to sell a 25% stake in Grupo Financiero Banamex to a company owned by Mexican billionaire Fernando Chico Pardo and his family, marking a step toward Citi's plan to take the unit public.

The sale, worth 42 billion Mexican pesos ($2.28 billion), is expected to close in the second half of 2026, the bank said in a filing.

The deal values Banamex at $9.12 billion at the current foreign exchange rate. Citigroup bought Banamex in a $12.5 billion deal in 2001, at which time a source familiar with the matter said the company had more businesses than it has now.

The deal comes after a tricky three-year period where the bank struggled to find an investor or acquirer. The deal also marks the latest move in Citi's retreat from Latin America, where the bank was once a player in retail banking in Brazil, Argentina and Colombia.

The latest stake sale triggered a goodwill impairment charge - usually recorded when an asset is sold below the price it is booked at - of $726 million for Citigroup, which will be recorded as an expense in the third quarter.

"The market was looking forward to divesting as much as possible at decent valuation. This is quite decent," said Suryansh Sharma, analyst at Morningstar Research Services.

Pardo, 73, will become chair of Grupo Financiero Banamex after the sale. Manuel Romo will remain as chief executive officer of Banamex.

"The investment from Fernando Chico Pardo, one of the most respected business leaders in Mexico, is a resounding endorsement of Banamex's strength and potential," said Citi CEO Jane Fraser in a statement.

Citigroup is working on Banamex's initial public offering to realize its full value, Fraser said, noting that the timing is subject to regulatory approvals and market conditions.

Banamex is the last international consumer banking divestiture in Fraser's streamlining plan announced in 2021. At the time, the bank committed to divesting from 14 markets across Asia, Europe, the Middle East and Mexico.

A Mexican unit separation represents the last major item on Citigroup's simplification "to-do" list, said Piper Sandler analysts led by Scott Siefers said in a note, reiterating their overweight rating on the stock.

"We view this evening's news positively and expect the stock to react well," the note said.

Citigroup shares are up 44% year-to-date, outperforming the S&P 500 bank index, which is up 23% so far this year.

MEXICO'S EIGHTH-RICHEST PERSON

Forbes ranked Pardo as Mexico's eighth-richest person in May, and lists his net worth as $3.5 billion as of Wednesday, backed by his majority stake in Grupo Aeroportuario del Sureste (ASUR), an international airport operator. His career took off at age 27 when he founded a stock brokerage that later became part of Carlos Slim's Inbursa Financial Group. 

Pardo currently chairs ASUR, which operates airports in Mexico, Colombia, and Puerto Rico and leads his own private equity firm, Promecap. His portfolio includes significant investments in port operations and hotel properties.

($1 = 18.3890 Mexican pesos)