Mexico takes railway from billionaire poised to purchase Banamex

Signage outside a Banco Nacional de Mexico SA (Banamex) Citibanamex bank branch in Mexico City. Citigroup is preparing to leave retail banking in Mexico, where it has its biggest branch network on the planet, as part of CEO Jane Fraser’s continued push to upgrade the company’s method.

Jeoffrey Guillemard/Bloomberg

Mexican President Andres Manuel Lopez Obrador took part of a railway owned by billionaire German Larrea’s Grupo Mexico SAB, raising concerns about how the relocation may impact a quote by the mining mogul to purchase Citigroup’s retail bank in the nation. 

An area of track in the state of Veracruz was considered “of public utility” and moved to a federal government entity that’s developing a line throughout the Isthmus of Tehuantepec, a reasonably narrow strip of land that separates the Pacific Ocean and Gulf of Mexico. The railway will become run by the Navy, according to a notification published in the day-to-day gazette on Friday.

The expropriation was a shock to business neighborhood and appeared to oppose Lopez Obrador’s project pledge to financiers that his federal government would not take personal property. While Friday’s notification stated the railway’s owners would be compensated, no information were provided.

The relocation threatens to overthrow Grupo Mexico’s talks with Citigroup to acquire the retail operations of Banamex, a deal that was of specific interest to Lopez Obrador due to the fact that of the lending institution’s financial significance and symbolic worth as one of the nation’s earliest banks. 

“It’s not exactly inviting for the government to seize a railroad,” stated Roger Horn, a senior strategist at SMBC Nikko Securities America in New York. “This is bizarre even for this administration, where [Lopez Obrador] has for the most part negotiated with the private sector to achieve his policy goals.”

GMexico Transportes SAB, which runs Ferrosur SA, the owner of the taken railway, stated armed Navy workers inhabited business centers on the Coatzacoalcos-Medias Aguas stretch of track start at 6 a.m. on Friday. The business is examining the “surprising and unusual takeover” it stated in a declaration.

Shares of GMexico Transportes fell 4.1% in Mexico City to the most affordable because January. Grupo Mexico extended early losses to plunge 4.5%. Inbursa, the Mexican bank owned by billionaire Carlos Slim, has a 17% stake in GMexico Transportes. 

The decree impacts 120 kilometers (75 miles) of Ferrosur’s 1,500-kilometer railway concession. The federal government has stated it prepares to construct and run a railway to link ports on the Gulf of Mexico with ports on the Pacific in a quote to boost trade. It’s developed to bring both individuals and freight, and will include 10 commercial parks along the path.

Larrea had actually satisfied two times with Lopez Obrador today, initially at a meal with other leading company executives on May 16 and once again in personal the next day, regional media reported. 

According to a report by regional company writer Dario Celis, Lopez Obrador had actually asked Larrea to deliver the stretch of railway that the Navy stated was the fastest method to construct the Isthmus train, however the mining mogul had actually decreased, rather using to construct a parallel path. The president stated no, according to Celis.

“This sets a negative precedent for investments in Mexico, specifically in regulated sectors,” stated Rodolfo Ramos, a strategist at Bradesco BBI. 

— With help from Leda Alvim


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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