January 17, 2022 | 5:00 a.m.
Citibanamex concentrates the market Credit cards in Mexico by having a quarter of the market, since it has focused on granting them to workers who receive their salary in a payroll account from the bank.
The firm occupies the first place by number of contracts for bank credit cards in the country, representing 25.2% of the more than 28 million plastics registered in the National Banking and Securities Commission (CNBV).
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Its closest competitor is BBVA which concentrates 22.8%, BanCoppel with 16.1% and Santander with 11.3%,. With this, between the four banks they concentrate 75.4% of the credit cards granted in Mexico.
The unit of Credit cards that the US firm manages through its Multiple Purpose Financial Company (Sofom) concentrated on capturing salaried clients or who receive income that enters the bank’s debit accounts, since they are less likely to be late or default on their payments.
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Citibanamex charged an effective rate of 30.1% in 2020
In December 2020, the three institutions with more than 100,000 total cards that presented the lowest Weighted Average Effective Rate by balance were Banregio (22.8%), Citibanamex (30.1%) and Banorte (30.2%), according to a Bank of Mexico report on basic credit card indicators.
The jewel in the crown for these banks is the credit card, which in Mexico is a very expensive product. The average rate is in the order of 40% currently
said José María Aramburu, former vice president of the National Commission for the Protection and Defense of Users of Financial Services (Condusef).
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Citibanamex is a very important card player and could have made an effort to reduce the interest rates. Many of his cards are above 60%, he would have positioned himself even more if he had lowered them, he criticized.
In addition, the cards generate commission income for the banking business, mainly from cash withdrawals at ATMs and late payments.
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If the owners were Mexican they would respond to local needs
Aramburú stated that all of the Citibanamex shares they are owned by Citigroup and therefore, decisions are made outside of Mexico, which could set aside the needs of the country, such as access to credit at low rates for both households and the productive sector.
The decisions have favored the banking infrastructure because there are more ATMs and point of sale terminals. However, small and medium-sized entrepreneurs see the key to credit closed and interest rates are very high, because those decisions are made outside of Mexico, because there are no votes, shareholders, or Mexican capital in those banks.
warned.
Until November 2021, Citibanamex had the third strongest branch network in the country, with 1,276 service centers, which represented 10.9% of the total in the country. In ATMs, it took fourth position with 9,015 units, which represent 15.3% of the banking system.
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Aramburú said that the Banamex brand is historically important and must remain in the hands of Mexican businessmen to respond to the demand for credit in the country.
“Not necessarily the Mexican bankers that we have right now, they could be entrepreneurs who are not yet dedicated to banking. It is very important that Mexican investors acquire a bank with 130 years of tradition”, he mentioned.
The sale of Citibanamex will have to be authorized by the National Banking and Securities Commission (CNBV) and the Federal Economic Competition Commission (Cofece) with the favorable opinion of the Bank of Mexico.
“You have to review the market concentration very well. Four banks dominate 75.4% of credit cards. If BBVA, BanCoppel or Santander want to buy Citibanamex’s Sofom, the sale may not take place as happened with Aeroméxico and Mexicana,” said the academic director of La Salle University.
A medium-sized bank and a small bank or non-bank entrepreneurs would be ideal buyers of Sofom, or of consumer banking as a whole.
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