Weill's Mexican adventure

Under Sandy Weill, the Citi that never sleeps won't be taking any siestas either. Last month the inexhaustible Weill extended the reach of his ever-growing empire further into Mexico, agreeing to buy Banamex, the country's leading financial institution, for $12.5 billion. "You can only do something like this once, and I think we both picked the best partner," says Weill.

Analysts say Citi's Mexican wedding marks the first in a series of big steps that the U.S. powerhouse will be taking to expand its share of key emerging markets, including Argentina and Brazil. The Banamex acquisition catapults Citibank's piece of the Mexican market to 26 percent, putting it neck and neck with rival BBVA Bancomer for No. 1. Citi also sees tremendous opportunities for Banamex, which is currently run by president Roberto Hernàndez, to serve Spanish-speaking communities in the U.S.

Why did Banamex, Mexico's strongest bank and leading financial group, sell? "Globalization advances in giant steps," says Manuel Medina Mora, director general of the Banacci financial group and future head of the merged Banamex. "The idea was how to manage for the leading Mexican financial group to continue being the leader in Mexico."

The deal seals the foreign takeover of Mexico's banking industry: 75 percent of Mexican banking assets are in foreign hands, and the few holdouts are likely to be gobbled up shortly. Citi is expected to retain the Banamex name in Mexico. The Citigroup name will be marketed more actively to corporate customers, says Medina Mora.

But the deal has its share of critics, including some Mexican legislators. One sore point: The government paid $5 billion to bail out Banamex in the 1995-'96 bank rescue; now shareholders, who paid more than $3 billion for the bank when it was privatized in 1991-'92, will walk away with a fat profit. "This is the kind of deal you can do in this country: [Former president Carlos] Salinas gives them the banks, the bankers break them, the government comes to their rescue with fiscal resources, and they sell them," complains Jesús Ortega, who heads the Senate's leftist Party of the Democratic Revolution.