Plans are advancing for an initial public offering of Citigroup Inc.’s Banamex business in Mexico after the bank finished separating out the division from its broader institutional offerings in the country.

The move sets up the bank to spin off Banamex in an IPO, as planned. The timing of that will depend on regulatory approval, but the bank has long targeted next year.

Citigroup has completed the separation of Banamex from its institutional banking business in Mexico as it prepares to list the retail bank, the Wall Street giant said on Monday. The move to split Grup