As you know, the government moved on Friday to take a large ownership stake in Citigroup. Citigroup, meanwhile, owns Banamex, the second-largest bank in Mexico. And it’s not legal for the U.S. government to own such a large stake in a Mexican bank. Felix Salmon explains:
Meanwhile, the debate over Citigroup’s Mexican subsidiary, Banamex, rumbles on. [...]
As you know, the government moved on Friday to take a large ownership stake in Citigroup. Citigroup, meanwhile, owns Banamex, the second-largest bank in Mexico. And it’s not legal for the U.S. government to own such a large stake in a Mexican bank. Felix Salmon explains:
Meanwhile, the debate over Citigroup’s Mexican subsidiary, Banamex, rumbles on. Under Mexican law, no government can own more than 10% of a Mexican bank, which is obviously a problem if the US government takes a 36% stake in Citigroup. The Mexican SEC is investigating, while Banamex is unconvincingly saying that Nafta somehow overrides Mexican law and makes the stake fine.
Otto over at Inca Kola reckons this story is a very big deal, and from what I know about Mexican politics I’m inclined to agree: no government can allow an illegal partial takeover of Banco National de México without kicking up an almighty political storm.
Presumably this could be resolved by having Citi sell Banamex off. Indeed, the logic of the situation points toward the government trying to break Citi down into smaller components and this could be a start on that process.
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