Analysts said Inbursa's bid for Citibanamex, as Citi's Mexican unit is known, now looked more attractive than rival Banorte for three reasons: its higher share price, a lower risk of cost cuts, and likely backing from the Mexican government.
"Inbursa now trades at a 35% premium to Banorte ... [giving it] a significant advantage if it were to issue shares to finance a transaction," the analysts said in the note, dated Aug. 2.
Inbursa, which is owned by billionaire Carlos Slim, last week reiterated its continued interest in buying Banamex, saying it was looking for partners to join its offer.
Inbursa would become the second-largest lender in Mexico after the local unit of Spain's BBVA if it won the bid, the analysts noted, leaving Banorte in fourth place.
"Don't underestimate Slim's interest in Banamex," they wrote. Slim controls America Movil, Mexico's largest mobile phone operator, in addition to industrial, retail and property interests.
The same analysts had previously tipped Banorte as the leading candidate.
Citigroup announced its plan to sell its Mexican consumer banking unit earlier this year.
Billionaire Ricardo Salinas Pliego and Spanish bank Santander were among the early bidders, but have since both exited the process.
According to recent media reports, Citi is now seeking at least $7 billion for the unit, while BofA analysts cited rumors that it could be looking for up to $12 billion.
In June, Reuters reported that Banorte had hired the investment banking unit of Bank of America to advise on the Citibanamex bid, citing sources.
(Reporting by Isabel Woodford; Editing by Daniel Wallis)