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Citigroup's ( C/PN ) sale marks retreat from Latin America

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Deal triggers $726 million goodwill impairment charge for

Citigroup ( C/PN )

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Pardo to become chair of Grupo Financiero Banamex

post-sale

(Adds analyst quote in paragraphs 11-12, stock price in

paragraph 13)

By Tatiana Bautzer

NEW YORK, Sept 24 (Reuters) - Citigroup ( C/PN ) 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 ( C/PN ) 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 ( C/PN ), 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 ( C/PN ) 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 ( C/PN ) 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 ( C/PN ) 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)