Mexico's second-largest banking group, Banamex, plans to pay around $1.4 billion in dividends to its parent Citigroup Inc. (C), the second dividend payment since the U.S. banking giant bought Banamex a decade ago.

In a Dec. 17 filing with the Mexican stock exchange, Banamex's banking unit Banco Nacional de Mexico said shareholders approved the payment of 7.54 pesos ($0.61) per share from accumulated profits, to be made in the following 20 days. Banco Nacional de Mexico is the main subsidiary of Grupo Financiero Banamex, which Citigroup bought in 2001.

Banamex spokesman Paulo Carreno said this is only the second time that Banamex will have paid dividends since the acquisition, having reinvested 92% of its profits, or around MXN100 billion, in Mexico. In 2005, Banamex paid dividends of about MXN8.9 billion.

The high level of reinvestment has contributed to Banamex's strong capitalization level of 22.5%--the highest among Mexico's major commercial banks--and "reflects Citigroup's confidence in Mexico," Carreno said. Even after the dividend payment, 80% of Banamex's profits will have been reinvested in Mexico, he added.

Banamex is Mexico's second-largest bank behind BBVA Bancomer, the local unit of Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA, BBVA.MC).

Mexican units have proven to be key profit centers for foreign parent banks, and were notably stable during the 2008-2009 global financial crisis when the local banking industry suffered less, thanks to lessons learned during Mexico's home-grown financial crisis of mid-1990s, including applying more stringent lending practices.

At the height of the global financial crisis, when Citigroup found itself in dire straits, there were occasional rumors that Citigroup was planning, or might have, to sell its Mexican business, which company officials always denied.

Carreno said Citigroup didn't take profits from Banamex even during that difficult period, but continued to invest in Mexico.

Banamex reported net profit of MXN4.74 billion in the third quarter of this year, which brought its year-to-date net profit to MXN17.1 billion. Net profit in all of 2009 was MXN18.79 billion.

A spokesman for Citigroup in New York declined to comment on the planned dividends.

-By Anthony Harrup and Amy Guthrie, Dow Jones Newswires; 5255-5980-5176; mexico@dowjones.com

--Matthias Rieker contributed to this article.
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