Citi said it intends to focus its consumer banking business on global wealth as well as payments and lending and a targeted retail presence in the U.S.
The exit does not include Citigroup's institutional business in the country.
Citigroup's Chief Executive Officer Jane Fraser, who took up the role in 2021, is reshaping the business, whose valuation has lagged behind rivals. She has committed to simplifying the bank, exiting businesses no longer seen as part of its core strategy. The bank is already pulling its consumer businesses out of Asia.
The Mexican exit is in keeping with that "strategy refresh," Fraser said.
Possible buyers could come from Canada, where the big six banks have said they have excess cash to spend on deals. One, Bank of Nova Scotia (BNS.TO), already has a sizable Mexico business.
The local arms of Banco Santander (SAN.MC) and BBVA (BBVA.MC) would have the cash to bid, while Mexican institutions Banorte and Inbursa could use an acquisition of Citi's operations to challenge this duo.
Before becoming CEO, Fraser was responsible for the Mexico business and for Citigroup's global consumer bank. In that role she worked to build on investments the bank made to refurbish the Mexico consumer business which had been known as Banamex.
By disposing of the businesses, Fraser said in a statement, "we'll be able to direct our resources to opportunities aligned with our core strengths and competitive advantages, focus on businesses that benefit from connectivity to our global network, and we will further simplify our bank."
Fraser added that Mexico remains "a priority market" for Citigroup's institutional businesses.
"We expect Mexico to be a major recipient of global investment and trade flows in the years ahead, and we are confident about the country’s trajectory," she said.
Institutional investors frustrated with Citigroup's relatively poor investment returns have long called for the bank to give up Citibanamex.
Fraser's predecessor as CEO, Mike Corbat, had invested more in Citibanamex even after it suffered losses in a massive fraud in an institutional business financing a supplier of Mexico's oil company.
Corbat also invested in lifting up the consumer banking business with new digital technology.
Citigroup shares rose as much as 1% in after-market trading. The company announced the exit just after the market closed.
The bank did not estimate the cost of exiting the business or what it might receive in a sale. The business currently uses about $4 billion of tangible common equity.
Citigroup has said it expects to free up about $7 billion of tangible common equity from its Asia exits.
The Mexico consumer businesses provided about $3.5 billion in revenue in the first three quarters of 2021 and $1.2 billion in pre-tax earnings, Citigroup said. They include $44 billion of Citigroup's $2.36 trillion of total assets.
Citigroup said the timing of the exit is subject to regulatory approvals in the United States and Mexico.
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