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.
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, 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, Bank of America and Bank of New York Mellon, according to the FT. European banks such as Royal Bank of Scotland also operate in Mexico’s banking sector and have government investment.