UPDATE 1-Mexico senators revive Citigroup ownership debate

(Updates with Banamex comment)

MEXICO CITY Oct 14 (Reuters) - Mexican senators are set to ask the Supreme Court to rule on whether Citigroup's local bank is breaking the law by being partly owned by the U.S. government, a Senate source said on Wednesday.

Senators voted and approved a resolution on Tuesday and are preparing to send it to the top court, the source, who asked not to be named, said.

The U.S. government's 34 percent stake in Citigroup (C.N) acquired during the global credit crisis raised legal questions about its Mexican unit, Banamex.

Foreign governments are generally not allowed to own banks in Mexico.

The senators' initiative does not refer to Citigroup specifically, but the U.S. government's ownership of Banamex, Mexico's No. 2 bank, has been contentious among some lawmakers who insist it is breaking the law.

They say Citigroup should be forced to sell Banamex, which it bought in in 2001 for $12.5 billion -- the biggest ever acquisition at the time in Mexico.

"We will continue to pay close attention to how these initiatives evolve," Enrique Zorrilla, Banamex's chief executive, told a news conference on Wednesday but he said the bank was concentrating on its core business.

In March, Mexico's government announced Banamex was not breaking the law, saying the rule did not apply because of the emergency caused by the global crisis. (Reporting by Miguel Angel Gutierrez and Tomas Sarmiento; editing by Carol Bishopric)