Citi could "re-pace" Mexico investment over Trump uncertainty
December 7, 2016
Citi's CFO says the bank plans to move ahead with its $1bn investment in Citibanamex even if the US president-elect's Mexico policies are "unclear"
Citigroup may “re-pace” its planned $1bn investment in Mexico because of uncertainty over how US President-elect Donald Trump will carry out his campaign pledges to overhaul trade and immigration policies between the two countries.
Citi intends to go ahead with the investment, Citigroup CFO John Gerspach said during a Goldman Sachs conference in New York on Wednesday. However, he said the incoming Trump’s administration plans for policies toward Mexico remain unclear.
"We really don’t know what the administration is going to do," he said. "It’s really unclear as to what they’re going to do, how they’re going to do it and where that impact is going to be."
He added, "We still feel very good about Mexico’s ability to compete based upon labor rates, access to natural resources. We like the reforms that the new administration has put in. So, we feel broadly constructive about Mexico."
The bank announced plans in October to upgrade its retail business in Mexico, Citi’s second biggest market. The bank also renamed its Mexican unit, previously known as Banamex, to Citibanamex. The $1bn investment plan through 2020 includes expanding Citibanamex’s ATM network and increasing its mobile bank offerings.
"A lot of that investment has to do with improving the infrastructure," Gerspach said. "A lot of that is an efficiency play and, therefore, it makes a lot of sense to go through it."
Citi’s investment in Mexico comes as it has moved to sell off its retail businesses in other countries in Latin America, including Brazil and Argentina. It also follows a $1.5bn investment made two years ago.
While Trump’s election has cast a shadow of uncertainty over business in Mexico, other companies have also announced plans to increase investments in the country.
On Wednesday, Walmart, which is the biggest retailer in Mexico, announced a $1.3bn investment. Walmart plans to build new distribution centers and and expand existing ones, Walmart México CEO Guilherme Loureiro said.