There is concern about the sale of Banamex. Previously, the dispute for first place in the Mexican financial system was between BBVA and Banamex.
However, the entity, still belonging to the American Citigroup, has lost market share, a situation that Banorte and Santander have taken advantage of at this time to surpass it.
Today, at the head of the financial groups is BBVA with 2.8 trillion pesos in assets, followed by Banorte with 1.8 trillion and Santander with 1.6 trillion. Banamex ranks fourth with 1.5 billion. Even so, it is one of the most important in the sector.
According to information from the National Banking and Securities Commission (CNBV), in 2018 Citibanamex was still in second place by assets.
Then he went to third place, and as of 2020 he was in fourth place, from where he has not come back. The second place has been occupied in this time, either by Santander or Banorte.
An analysis by Credit Suisse highlights that Citibanamex has steadily lost ground over the past five years.
Proof of this, he points out, is that it has lost 408 base points of participation in the total loan market (in the different segments) to remain at 10 percent. Here stands out the loss of up to 567 basis points in the consumer segment in the period, where, he says, it has a market share of 15.8 percent.
It highlights that the story has not been different on the financing side, with a market share loss of 229 basis points in retail deposits in the last five years. Furthermore, he emphasizes, it has also consistently lagged behind the system in terms of profitability.
For its part, an analysis by BofA Securites states that, although Citibanamex has been losing market share in recent years, “we believe that the franchise could attract the interest of many potential stakeholders with operations in Mexico.”
In the banking sector there is no company that has substantial market power. However, it is an oligopolistic sector, which fits within the concept of substantial or joint dominant power (PSC). This can be seen in the high interest rates and commissions charged by banks and in the little effect that new entrants to the market have.
In a first approximation, according to Víctor Pavón, the PSC can be defined as the “joint capacity” that a group of economic agents possesses to implement anti-competitive commercial practices, increase prices or displace competitors, for example. In a strict sense, the fact that a group of economic agents owns PSC does not imply a violation per se of competition laws, as does the abuse of dominance that the PSC confers. The abuse of PSC can be described then as that scenario in which a set of economic agents implement, without explicit coordination and as a natural result of their interaction in the market, a set of commercial practices that harm the process of competition and free competition in a market. For example, a group of companies could tacitly collude to adopt strategies that exclude the entry of rival companies, which would allow them to establish margins well above the competitive level and, in the process, perpetuate their dominance in the market.
It is important to mention that the element of lack of explicit coordination between economic agents is fundamental for the correct characterization of PSC, since the explicit coordination to implement practices that undermine the competitive status quo would properly qualify as a violation under the category of collusion, typified in the Mexican LFCE as an absolute monopolistic practice.
If Banamex is bought by one of the agents that has substantial market power, the joint substantial power held by the financial groups will be strengthened, so, in the opinion of a server, it should be objected. Only if a new entrant is strengthened in the market should this concentration be authorized.
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