Monday, 23 February 2009

Itau Eyes Citigroup Mexican Unit, According to LatinFinance. Citi's Stake in Brazilian Credit Card Company Up for Sale


Setubal (left) the day he announced the takeover
of Unibanco. He must be pleased to be well
placed at this moment, sitting on a pile of cash
and ready to buy rivals at large discounts


In a brief titled ''Itaú Eyes Mexico Opportunity´´ -- and which was kindly ceded to this blog by a good source, -- magazine LatinFinance got one nice scoop. It is the first vehicle in Latin America directly linking Brazilian giant Itaú to a possible acquisition of Citigroup's Banamex unit in Mexico. Speculation over the sale of this big jewel in Citigroup's crown was resurrected last week as shares of the New York-based bank tumbled on rumours of nationalisation. ''Besides a possible bid from local money, bankers in Mexico wonder whether a large Brazilian institution might make a play. Chief among potential suitors is Itaú, which recently jumped into the big league of global banks through its merger with Unibanco,´´ says LatinFinance.

LatinFinance reporters went beyond this -- they are less powerful than Reuters or Bloomberg or even Valor Econômico, but often scoop them. Itaú CEO Roberto Setúbal told the magazine's daily newsletter that Latin America should present the bank with opportunities: ''Mexico is the second largest economy in Latin America, and it is politically and economically stable. I personally like Mexico, and think it’s very attractive,´´ Setúbal told LF. He is already on the lookout for opportunities: ''Banamex and Banorte are attractive assets, but it doesn’t appear to us that they are for sale,´´ Setubal said, adding that he doesn't see cultural and linguistic barriers preventing Itau’s entry into Mexico. Banamex could cost potential acquirers less than $7 billion.

On the other hand, Reuters reporter Elzio Trindade Barreto Jr. (long name, longer than mine, isn't it?) reported on Friday
Citigroup's plans to sell its 17 percent stake in Brazilian credit card company Redecard; Barreto obtained the scoop after sources with direct knowledge of the plans briefed him on the bank's plans. Citigroup would potentially raise 3.1 billion reais from such sale. We have insisted in this blog, based on the assertions of knowledgeable sources, that Citi is considering selling some core units of its Brazilian business -- which may fetch the ailing bank billions of much-needed dollars. The first move would be selling most of the stake in Redecard. One unit Citigroup may possibly try to sell afterwards would be its consumer-financing unit, one person with knowledge of the bank told this blog.

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