Citigroup Could Lose $20 Billion Mexican Unit: Report - Financials * US * News * Story

Runway Angels
The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.
Smartphone Guide
Here's a need-to-know guide to nine devices, based on features, price, network and platform.
Wines for the Holidays
Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES

A Healthier & Wealthier You
Take the following quiz and find out how much you know about the impact of obesity on the health of the U.S. economy.
The Billionaire BFF's
Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?
The Many Myths of Coca-Cola
Can you tell which statements are true, and which ones are just rumors?

SPECIAL REPORTS

Winterizing Your Portfolio
If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.
Investor's Guide to Real Estate
Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.
Alternative Investing
Stocks and bonds? Sure. But it's a big world out there for investors.

CNBC ON DIGG

Citigroup Could Lose $20 Billion Mexican Unit: Report

Published: Monday, 19 Oct 2009 | 6:53 AM ET

Text Size

By: CNBC.com

Citigroup could be forced to sell its Mexican subsidiary Banamex as Mexico’s Supreme Court is set to investigate claims that the U.S. government's involvement is illegal, according to a report in the Financial Times.

RELATED LINKS

The U.S. government bailout of Citi has placed the unit in breach of national law, which bars foreign governments from owning stakes in domestic banks, the report said.

The loss of Banamex would be a severe blow for Citi, [C Loading... () ] as the unit accounts for roughly 15 percent of global profit and could be worth some $20 billion, the paper wrote.

If Citi is found to be in breech of the law, it could have similar implications for the likes of AIG, [AIG Loading... () ] Bank of America [BAC Loading... () ] and Bank of New York Mellon, according to the FT. European banks such as Royal Bank of Scotland [RBS-LN Loading... ()] also operate in Mexico’s banking sector and have government investment.

Banamex, or Banco Nacional de Mexico, is the country's second-largest bank and a symbol of national identity as it spent much of its history in state control.

The Mexican finance ministry has previously passed a ruling stating that Banamex’s status was acceptable because the U.S. aid was circumstantial and transitory, the FT said. But opposition senators now say they want the Supreme Court to decide whether that ruling is constitutional.

If the decision goes against the ministry, it could ultimately end in legislation forcing Citi to sell a stake of Banamex or all of it, the FT said, citing experts.

“The Mexican ministry of finance has concluded that we are in compliance with Mexican law ... In addition, our goal is to repay Tarp as soon as possible, and that will put the entire issue to rest,” a Citi spokesperson told the Financial Times.