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Citigroup Buys Mexico’s Strongest Bank; It’s the Biggest Corporate Deal in Mexican History

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Last week Citigroup, the largest banking company in the US, announced that it would buy the strongest bank in Mexicofor $12.5 billion. The purchase of Grupo Financiero Banamex-Accival, or Banamex, is the largest financial servicestransaction of any emerging market and the biggest corporate deal in Mexican history.

Major US newspapers have focused on how the deal signals US bankers’ “new faith” in the Mexican market, but there areother issues at stake, including globalization, trade liberalization, and Citigroup’s history of corruption andmoney-laundering.

Citigroup has been in Mexico since 1929, and the history is long and complicated. A few of the highlights:

-Citibank was a leader in the US corporate campaign to pass the North American Free Trade Agreement.

-In December of 1994, when the Mexican peso plummeted, US Treasury secretary Robert Rubin engineered a $20 billionbailout of the Mexican financial system. At the time, Ken Silverstein and Alexander Cockburn wrote in TheNation: “The need to attract foreign money gave US investors great leverage with Mexican authorities… thecentral demand of US fund managers has been that Mexico keep the peso artificially inflated, which protects the valueof their Mexican investments by allowing favorable conversion back into dollars.” Rubin was formerly with USinvestment giant Goldman Sachs. In another article, Cockburn noted, “The Mexican bailout… will allow Goldman Sachsand its affiliated investors to cash out their Mexican holdings and also give them the opportunity for short-term,immensely lucrative plays in Mexican bonds…” The same Robert Rubin is now Citigroup’s vice chairman.

-In 1998, a 3-year sting operation on the largest drug money-laundering case in US history culminated in a federalgrand jury in Los Angeles charging 3 Mexican banks with laundering millions of dollars in drug profits. One of thosebanks was owned by Citibank.

-A General Accounting Office report in 1998 found that the Citibank had violated its own policies in helping RaulSalinas de Gortari, brother of the former Mexican president who is in prison for masterminding a murder secretly movebetween $90 and $100 million out of the country using Citibank accounts. (Last week Citigroup said that it wouldhire a Federal Reserve expert to handle its anti-money laundering activities.)

Both Citigroup and Banamex have their reasons for making the deal.

The revival of the Mexican economy, which grew by almost 7% last year, makes the Mexican market increasinglyattractive to Citigroup. So also does the huge increase in trade between Mexico and the US since NAFTA was adoptedin 1994. Last year, it rose to $275 billion.

Citigroup Chairman Sanford Weill told analysts last week that the Mexican economy is “underbanked,” with lendingaccounting for 15% of GDP compared with 29% in Brazil and 72% in the US.

Citigroup vice chairman Robert Rubin, the former US Treasury secretary, said that “There is a very large Hispaniceconomy in the US, which we can reach out to through Banamex. The GDP of that population may be as much as 80% ofMexico’s GDP,” which is about $600 billion.

The chairman of Banamex, Roberto Hernandez, said that the deal with Citigroup would provide “the financialintegration we need to accelerate economic development” in a world of free trade and globalization.


  • James Petras, Professor of Sociology at the State University of New York at Bingamton and author of “DirtyMoney: Foundation of U.S. Growth and Empire” in La Jornada, May 19, 2001
  • Alberto Giordono, publisher of NarcoNews. E-mail: “”:http://””>
  • Ilyse Hogue, Director of the Rainforest Action Network Citigroup Campaign.

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