Analyst says Santander’s exit from Banamex bidding may ease capital concerns


Jefferies analyst Benjie Creelan-Sandford said Friday the confirmation from Banco Santander S.A. SAN, -1.21% that it won’t continue bidding for Citigroup Inc.’s C, -1.29% Banamex unit in Mexico should ease capital concerns. He reiterated a buy rating on the stock and said Santander’s decision may “allow part of the company’s greater-than 15% implied discount to the listed sum-of-the-parts to unwind.” Creelan-Sandford said the market has been concerned about Santander’s common equity tier one position despite assurances from the company that a bid for Banamex would not entail the issuance of more stock or alter its capital targets. “An end to the bid process may also open the door to management reviewing its dividend payout policy going forward,” he said. Earlier on Friday, Santander said it submitted a non-binding offer for Banamex, but it would not continue to the next stage of the sale process. U.S.-listed share of Santander are down 24.6% in 2022 compared to a loss of 16.1% by the S&P 500 SPX, -0.93%. Citigroup announced in January it would sell its Banamex consumer banking unit as part of a strategic overhaul of the megabank.

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