The agency Fitch does not expect the decision of the American Citigroup of exiting its consumer and corporate banking businesses in Mexico, affect the performance of the banking system during 2022.
In this sense, he considers that the outlook for the year will continue to be neutral for banking.
Bertha Pérez, director of financial institutions at Fitch for Latin America, pointed out that the announcement regarding the sale of Banamex, is a relevant event for the sector as it is a systemic institution, but the impact will depend on the result of the transaction.
If the bank is acquired by a national player with a relevant presence, we could see a concentration in the already highly concentrated Mexican financial system. But if it is acquired by a foreigner without a presence in the country, this will add one more player to our system”, he explained in a forum organized by the rating agency.
In this sense, he stressed that it will be necessary to wait for the conclusion of the process, which could take time due to the necessary regulatory approvals, once the buyer is defined or known.
The 10 largest concentrate 83% of assets
In a new analysis released this Thursday, the agency mentions that as of November 2021, the 10 largest banks in the country concentrated 83.2% of total assets.
It highlights that the sale of retail banking operations by Citigroup, could potentially reshape the competitive structure of the banking system, since Citibanamex It is a systemic bank at the national level with high interconnectivity in the system.
“However, the parent company’s decision is not expected to affect the performance of the banking system during the current year. As of November 2021 Citibanamex occupied the fourth and second largest participation in Mexico by loans and customer deposits with market shares of 10 and 14.3% respectively”, the document specifies.
Fitch recalls that it recently placed the ratings of Citibanamex and affiliates on negative watch, due to uncertainty about the possible credit implications for these subsidiaries.
Note that the announcement of Citi follows processes similar to those disclosed in 2021 by other foreign financial intermediaries in Mexico, which have also strategically reoriented their operations in the country, such was the case of JP Morgan in February of that year, when reporting a plan to exit services of private banking.
“Although Fitch considers these actions as isolated events that are in line with pure individual strategic redirections, if this continues, it could add uncertainty to the appetite of foreign investors and further concentrate the financial system”, he warns.
In this framework, the perspective of Fitch for the Mexican banking sector for 2022 is neutral, since it expects credit expansion to increase modestly to 4.0% in the year, depending on macroeconomic, political and governance stability, which, together with the increase in interest rates , will slightly improve profitability, although it will remain below pre-pandemic levels.
“Asset quality and liquidity are expected to remain at adequate levels,” he points out.