The Citibank Acquisition of Confia in Mexico

Citibank--The Confia Acquisition in Mexico

Focus: Organizational Integration, Products, Human Resources, and Global Strategy after Acquisition

Introduction

On August 12, 1998, Citibank took full ownership and control of the medium-sized Mexican banking group, Confía, dropping the latter's name and logo from the 280 branches throughout Mexico, and from that point on operating it as part of Citibank Mexico. The road that led to this outcome was rocky to say the least, and the fit of the Mexican bank into Citicorp's global organization and strategy was quite different from what would have been expected only months earlier. This discussion describes the sequence of events involved and the ways in which the process was linked to the organizations and people involved. Before starting into the banks' situations and characteristics, an orientation to the time and place is useful.

The Economic Situation in Mexico during 1994-95

Mexico was one of Citibank's main emerging market customer bases in the early 1990s. After a very rocky relationship through the 1980s, when Mexico's government declared an inability to pay its foreign commercial bank debt, including more than $US 3 billion owed to Citibank, the country had finally returned to a positive growth path and was delivering solid profits to Citibank in both corporate/institutional banking and retail banking. Mexico's economy grew at an annual rate of more than 5% during the 1990-1994 periods. However, the problems of an overvalued currency, heavy inflow of financial investments into high-yield Mexican securities, and political events in 1994 produced a dramatic decline of confidence in Mexico. Mexican and foreign investors saw the January uprising in Chiapas against M...

... middle of paper ...

...ch difference between cultures was between Mexican and American bankers

in the retail divisions of the two banks. Citibank promoted a young and fairly aggressive internal culture

throughout its retail operations worldwide. Confia likewise had an aggressive attitude toward the business.

Both banks attempted to offer client-friendly service, and it could be argued that Confia was more

successful at it in Mexico, but at least the intent was quite similar in both organizations. In fact, this was

one of the key reasons that Citibank was interested in acquiring Confia in the first place.

In sum, the cultural differences among the three organizations tended to have more to do with the

types of business than with the nationalities of the people. This was quite striking to observers, and to

Citibankers alike, in the process of the integration of Confia.