NEW YORK (Reuters) -Citigroup ( C/PN ) still plans to pursue an IPO for its Mexican retail unit even after receiving a new offer by mining and transportation conglomerate Grupo Mexico, Citi said in a statement on Monday.

The competing bid comes after Citi announced last month it would sell a 25% stake in Banamex to local billionaire Fernando Chico Pardo, who chairs airport operator ASUR, at 0.8 times the book value. 

"We remain committed to realizing the full value of Banamex for our shareholders, and the agreement we announced with Fernando Chico Pardo and the proposed IPO continues to be our preferred path to delivering that outcome," the bank said. "Of course, we will review Grupo Mexico's offer in a responsible manner and consider, among other risk factors, the ability to obtain required regulatory approvals and the certainty of closing a proposed transaction."

Citi will also sound out top Mexican investors in the coming months to buy minority stakes smaller than Pardo's, it said last month.

Grupo Mexico, controlled by German Larrea, is offering to buy Citi's retail unit more than two years after it had scrapped previous plans to do so. At the time, Larrea withdrew the offer as tensions with the administration of then-President Andres Manuel Lopez Obrador led the two sides to abandon an agreement.

Under its offer, Grupo Mexico would purchase 25% of Banamex at 0.85 times its book value, and the remaining 75% at 0.80x book value, it said. That would mean a slightly higher value than what was offered by Pardo. 

Grupo Mexico shares fell more than 15% in late morning trading.

Even before tensions with the government, talks with Larrea had been repeatedly delayed, according to a person with knowledge of the previous talks who declined to be identified discussing private negotiations.

Citi is aiming to fetch a higher IPO price than the valuation it set with Pardo, which is seen as a floor for the share price, and the slightly higher price offered by Grupo Mexico would not be a deciding factor, the source said.

Citi paid $12.5 billion for Banamex in 2001. The offer could trigger a bidding war, Bradesco analyst Rodolfo Ramos wrote in a report.

"Larrea's wallet size reduces the likelihood that Chico will be compelled to counter, perhaps together with other business groups, but Citi's next move will likely be defining in how we proceed from here," Ramos wrote. "Media perception of these two billionaires is clear; both have shied away from public scrutiny and presence, but Larrea has never backed out of a good legal fight, and Chico, aside from those of us closely following Mexico's airport industry, is a lesser-known businessman."

Grupo Mexico shares may become more volatile if Larrea decides to increase its bid, Ramos added.