Reply #19: Slim’s bank buys up to $150m in Citi shares

[Demeter]

http://www.ft.com/cms/s/0/8c5ff868-bc0d-11dd-80e9-0000779fd18c.html

By Adam Thomson in Mexico City and Greg Farrell in New York

Published: November 26 2008 23:27 | Last updated: November 26 2008 23:27

Inbursa, the bank owned by Carlos Slim, the Mexican billionaire, has bought up to $150m in Citigroup shares over the past week as the US financial group’s stock plunged in value.

Inbursa, Mexico’s sixth largest bank, began buying the stock as prices fell on Wednesday last week, and continued the next day when they punctured the $5 mark. The bank’s brokerage arm is believed to have bought as many as 29m Citigroup shares for about $150m.

Arturo Eliás Ayub, Mr Slim’s son-in-law and the communications director of his Carso Group, on Wednesday confirmed the transactions. “ bought some shares for clients and investment funds,” Mr Eliás Ayub told the Financial Times.

Mr Eliás Ayub would not specify amounts but a company source confirmed that Mr Slim, one of the world’s richest men, was an Inbursa client in the transactions. Inbursa declined to comment.

Thanks largely to a $20bn US government-backed rescue plan, Citigroup shares have staged a recovery of about 60 per cent from last week’s levels.

On Wednesday, they closed in New York at $7.05, 16 per cent up on the previous day’s close.

The move has sparked rumours around business circles that Mr Slim might have been gearing up for an attempted purchase of Banamex, Citigroup’s Mexican subsidiary and the country’s second-largest bank. Local bankers in Mexico City believe that Banamex could be valued at anywhere between $10bn and $20bn.

However, Citigroup sources say that there is no plan to sell Banamex and that the bank would only contemplate doing so as part of a worst-case scenario. Sources close to Mr Slim also dismissed rumours that the billionaire would like to acquire Banamex.

Analysts argue that Mr Slim’s purchase of Citigroup shares fits seamlessly with his reputation as a value buyer. He has been particularly active in recent months. In September, he became the third-largest shareholder in the New York Times after reporting a 6.4 per cent stake valued at $127m.

At the time, Mr Eliás Ayub told the FT: “The investment is purely financial. It’s a great company, the price is cheap and it gives a good dividend.”

Mr Slim, who made his ­fortune from telecommunications, including Telmex, Mexico’s fixed-line carrier, and América Móvil, the pan-American cellular phone company, has been buying other media stock. He has significant holdings in the debt and equity of Mexico’s two largest broadcasters, and disclosed a 1  per cent stake in Independent News & Media in May.