By Valentine Hilaire

MEXICO CITY (Reuters) -The Mexican government is no longer interested in purchasing Citigroup's local retail arm, known as Banamex, a government spokesperson said on Thursday, adding that the U.S. bank "chose a different path" for its unit.

Mexican President Andres Manuel Lopez Obrador floated the idea of purchasing the bank in May, right after Citi announced plans to pursue an initial public offering of the business instead of an outright sale.

Deputy Finance Minister Gabriel Yorio told Reuters at the time that Mexico could pursue a total or partial acquisition of the unit.

Government spokesperson Jesus Ramirez did not immediately respond when asked which path the U.S. bank is taking.

Citi did not immediately reply to a request for comment.

Before Citi's decision to list Banamex, banking sources said mining conglomerate Grupo Mexico had been eyeing the unit for around $7 billion.

The deal to sell Banamex to Grupo Mexico fell through after tensions flared between the conglomerate, controlled by business mogul German Larrea, and Lopez Obrador following a government move to expropriate a section of one of Grupo Mexico's railway lines.

Foreign financial firms such as Spain's Banco Santander and local banks like Grupo Financiero Banorte were among a robust list of potential bidders when the sale was first announced in January 2022.

(Reporting by Valentine Hilaire; Editing by Brendan O'Boyle and Jamie Freed)