"Mexicans also are distrustful of Citibank after learning it allowed its
private-banking division to be used to channel almost $100 million in
alleged drug money into Swiss accounts for Raul Salinas, brother of former
President Carlos Salinas."

- from Associated Press story

http://www.nandotimes.com/business/story/55619p-814635c.html


Business: Citibank acquisition angers Mexican taxpayers who bailed out
Banamex

By MARK STEVENSON, Associated Press

MEXICO CITY (August 4, 2001 12:55 a.m. EDT) - Some say this is how
globalization should work: A rich U.S. bank expands into a developing
nation, spreading capital around. Others see Citigroup's acquisition of
Mexico's second-largest bank, completed Friday, as a classic example of a
backroom deal concentrating power and wealth.

Citigroup's takeover of Banamex has weathered questions about money
laundering, anger among taxpayers who paid billions to bail out the Mexican
bank, and concern over the fate of Banamex's trove of Mexican art, which
Citigroup will apparently acquire.

But for many Mexicans, the biggest question is whether their country - in
finance, transport, manufacturing - is becoming a mere branch office for
foreign firms. Almost all of Mexico's financial sector has been sold to
foreigners over the last three years.

Few deals so typified the good and the bad of globalization as the $12.5
billion cash and stock deal sealed Friday on the floor of the Mexico City
Stock Exchange.

When it was announced in May, President Vicente Fox called the acquisition
an "extraordinary" event for Mexico, where banks are poorly capitalized,
grant few loans and serve less than a quarter of the population.

"We know we have to participate in globalization," Fox said. "We know we
have to create financial reserves inside the country and attract them from
abroad, and that is what this gigantic investment by Citibank in our country
does," he said.

Some say Fox was happy for other reasons as well: His college buddy and
campaign donor, Banamex President Roberto Hernandez, may have gotten as much
as $3 billion for selling his stake in the bank.

That wouldn't be too controversial, except that taxpayers spent more than
$3.4 billion to bail out the bank when it was drowning in bad loans in 1995.
Little of that money was ever repaid by the bank's shareholders or the loan
holders.

Both Hernandez and Fox say none of the sale price should be repaid to
government coffers. Hernandez has waxed poetic about the global aspects of
the deal: "The idea was to attack the market head-on and create a truly
transborder North American bank."

Others saw it in less glowing terms. "It's not fair that Mexicans subsidize
with our tax money some juicy business deals that benefit a few," Sen. Jesus
Ortega said.

Fox's own policies have fed the growing sense that globalization benefits
only the rich. The president has resisted a full investigation of the bank
bailout and has appointed business magnates to key government positions.

One of those - Carlos Slim, Latin America's richest man, whom Fox briefly
appointed to the board of the state-owned oil monopoly - hasn't sold out to
foreigners yet.

But Slim's telecommunications empire is so far-reaching that, as newspaper
columnist Marcos Rascon said, "it is present in every aspect of the culture
... using the Internet, making a phone call, watching television, going to
the movies or buying a record."

The issue of foreign domination is also significant in a country invaded by
what are known as "los marts": Wal-Mart, HomeMart and other U.S. chains.
Mexico City, indeed, may be the only place in the world where Woolworth's
stores - complete with lunch counters - are going strong.

The foreigners have sometimes ridden roughshod over Mexican sensibilities.
In June, U.S. retailer Costco drew wide protests when it began to tear down
a landmark 1940s resort near Mexico City to put up a shopping mall.

Resentment is sharpened by the fact that, of the nearly 20 banks around
before the 1994 peso crisis, only a few still exist - and the largest have
been bought by the likes of Spain's Banco Bilbao Vizcaya or Canada's Bank of
Nova Scotia.

And it doesn't help that, along with Banamex, Citigroup will acquire one of
the largest private collections of Mexican art and real estate, ranging from
16th-century palaces to great paintings.

Nationalist fears were assuaged only slightly when experts said the artwork
apparently cannot be sold or sent abroad by Citigroup.

Mexicans also are distrustful of Citibank after learning it allowed its
private-banking division to be used to channel almost $100 million in
alleged drug money into Swiss accounts for Raul Salinas, brother of former
President Carlos Salinas.

None of that proved a problem for regulators in the United States and
Mexico, who quickly approved the deal.

"It's a grand case of fraud," said the leader of Mexico's Environmental
Green Party, Jorge Gonzalez Torres. "It's all part of the Mexican tragedy."



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