In its efforts to boost returns by streamlining global operations, Citigroup Inc. C made yet another move. The Wall Street banking giant is set to sell its Nicaraguan businesses to Panama-based Grupo Financiero Ficohsa.
Per a statement by Grupo Financiero, the company will acquire Banco Citibank de Nicaragua, S.A. and Cititarjetas de Nicaragua, S.A. The terms of the deal, which is subject to regulatory approvals, were not disclosed.
The deal comprises Citigroup’s portfolio of commercial loans, personal loans, deposits and credit cards. As of Dec 31, 2014, Citigroup’s Nicaraguan operations included $255 million in total assets, $171 million in loans and deposits of $197 million.
With over 600 employees, Citigroup operates 17 points of service and 11 ATMs. Per the statement, in terms of market share, Citigroup operates the second largest consumer bank in Nicaragua.
Camilo Atala, president of Grupo Financiero stated, “This acquisition is another important step in our expansion strategy, which further strengthens our position as one of Central America's top 10 financial groups. It also allows us to enter a country with great potential for growth, with a robust and well-positioned operation.” The deal will enable Grupo Financiero to expand its services to small and medium-sized enterprises in Latin America.
This is the second deal between the two companies, following Grupo Financiero's acquisition of Citigroup’s consumer banking business in Honduras in Jun 2014.
Strategic Actions
The latest move by Citigroup is not surprising as the company, which has already retreated from some global markets, announced “strategic actions” in Oct 2014. The company stated that it proposes to exit the consumer banking business in 11 markets.
The 11 markets include Nicaragua, Panama, Costa Rica, El Salvador, Guatemala, Japan, Guam and its consumer finance business in Korea and the Czech Republic, Egypt and Hungary. Citigroup expects to significantly complete its strategic actions by the end of 2015. The move comes in line with its strategy to focus on markets where it has a strong presence and long-term growth prospects.
Bottom Line
We remain encouraged as the company continues with its repositioning and restructuring initiatives while remaining focused on resolving several internal setbacks, including legal issues. We believe that these streamlining initiatives will bolster the company’s capital position, reduce expenses and drive operational efficiencies.
Citigroup currently carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the finance space include Customers Bancorp, Inc. CUBI, Pinnacle Financial Partners Inc. PNFP and Southern First Bancshares, Inc. SFST. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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