SAO PAULO - The Brazilian unit of Citigroup Inc. on Tuesday became the second foreign group in as many days to pull of out of Brazil's government auction of Banco do Estado de Sao Paulo SA.
BankBoston Banco Multiplo SA, the Brazilian retail arm of FleetBoston Financial Corp., withdrew Monday.
Citi's move caught markets by surprise, as Citi was the leading foreign candidate in the race to acquire Banespa, as the federal bank is known.
After FleetBoston pulled out, analysts said they expected other foreign bidders to follow suit - except Citibank.
Citi said it would not take part in next week's auction because forecast return on capital did not meet its standards. The company added that it remains committed to expansion in Brazil.
The auction is scheduled for Nov 20. Banespa is Brazil's eighth-biggest bank. It serves the country's wealthiest and most populous state, Sao Paulo, and has 573 branches.