Nov. 4 (Bloomberg) -- Mexico’s Senate asked the Supreme Court to rule on whether the Finance Ministry has authority on its own to permit foreign banks such as Banamex, a unit of Citigroup Inc., to operate in the country.

The request for an opinion addresses the ministry’s decision on March 19 that Banamex, Mexico’s second-largest bank, didn’t run afoul of the country’s ban on foreign-government ownership of banks even after the U.S. government bailed out Citigroup. The Senate approved the petition on Oct. 13.

The move today reopens a controversy that could jeopardize the future of international lenders in Mexico.

Mexico’s government came under pressure from lawmakers in March to force Citigroup to dispose of its Banamex unit after the U.S. Treasury agreed to take a 36 percent stake in the New York-based lender. Citigroup bought Banamex for $12.5 billion in 2001.

Salvador Rocha, a consultant to the Senate, said in an interview on Oct. 19 with the newspaper Excelsior that if the Supreme Court accepts the petition it could take about three months to issue a decision. Rocha served as a senator and representative in the Mexican Congress.

“The court will dismiss this petition, no doubt,” said Alberto Benguiat, a partner with the Mexico City law firm of Benguiat, Benezra & Asociados. The firm, which counsels Mexican banks, hasn’t done work for Banamex.

Ministry Ruling

The Finance Ministry said in a statement with its decision on March 19 that “foreign government aid programs don’t violate Mexican law” prohibiting foreign-government ownership of banks.

Mexico’s National Banking and Securities Commission said it would study the legal implications of the bailout after the U.S. government agreed on Feb. 27 to a third rescue of Citigroup.

The Finance Ministry said it would send Congress a bill to maintain the restriction on foreign governments holding stakes in Mexican banks while stating more clearly the exceptions that could be made during times of crisis.

The Ministry has yet to send the proposal to lawmakers, Senator Ricardo Monreal of the Labor Party said in an interview on Oct. 13.

The proposal was to specify that banks, after three years of operating under the exception, would have to sell 25 percent of their Mexican unit’s shares on the local market. That requirement would rise to 50 percent of shares after six years.

Four of Mexico’s five largest lenders are foreign owned, the government said in a January report: Banco Bilbao Vizcaya Argentaria SA, Citigroup Inc., Banco Santander SA and HSBC Holdings Plc. Grupo Financiero Banorte SAB is the fourth-largest lender, according to the report.

To contact the reporter on this story: Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net

Last Updated: November 4, 2009 21:42 EST