In an effort to arrange more funds for its core operations,
) is likely to shed its stake in Grupo Aeromexico, according to a
report. Airways of Mexico, SA de CV - a company that operates as
Aeromexico - is the flagship airline of Mexico and is based in
Colonia Cuauhtemoc, Cuauhtemoc, Mexico City.
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Earlier in 2007, Citi was among a group of investors that
contributed a total sum of $250.0 million into the privatization
of Aeromexico. Still the U.S. banking giant was the principal
shareholder with a 37% stake. Among others, Atlanta based
Delta Air Lines Inc.
) also holds a stake of roughly 5% in AeroMexico.
The rumors of Citi offloading its stake in AeroMexico are not
unforeseen. Since 2007, the banking major has maintained that its
investment in the Mexican airline is a provisional one.
Citi's interest in AeroMexico is under Citi Holdings division,
which was set up for its unwanted and underperforming assets and
businesses. However, the unit's waning revenues have proved to be
a headwind for Citi's finances. Citi Holdings recorded negative
revenues of $3.7 billion in the third quarter of 2012 against
positive revenues of $1.1 billion in the year-ago period.
Citi came up with the decision to divest its non-core and
unprofitable operations to focus more on its core business lines.
This comes on the back of a sluggish macroeconomic environment
and stringent regulatory landscape.
Several other financial institutions have started shedding
non-profitable businesses due to the slow economic growth. In
August this year,
Bank of America Corporation
) divested its international wealth management operations to
Switzerland-based private bank
Julius Baer Group Ltd.
) for roughly $882 million.
Citi currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. However, we believe that the bank's
global footprint and attractive core business can lead to an
improvement in efficiency and add to its competitive edge.