Axis Bank to Acquire Citibank India Consumer Business for $1.6 Billion

Updated on: 05 Apr 2022 // 14 min read // #mmm news
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Citibank Group announced yesterday (i.e. on March 30) that it had an agreement with reputed private lender Axis Bank for the sale of Citibank’s consumer businesses in India. Axis Bank will acquire Citibank's consumer business in India for a whopping $1.6 billion in an all cash deal

The transaction consists the sale of the Citibank’s consumer banking businesses in India, which includes retail banking, credit cards, wealth management, and consumer loans. Apart from this, the transaction also consists the sale of the Citicorp Finance (India) Limited, consumer business of Citi Group’s non-banking financial company. It comprises the asset-backed financing business, including commercial vehicle loans, construction equipment loans, and personal loans portfolio.

However, the statement clarified that the deal excludes Citigroup’s institutional client businesses in India saying that “Citi remains committed and focused on serving institutional clients in India and globally”.

Citigroup said that the employees (number up to 3,600) who are part of the consumer business of Citibank India, will be transferred to Axis Bank after the completion of the proposed transaction.

Ashu Khullar, CEO of Citi India said the deal with Axis Bank is a positive outcome for Citi’s staff and the company's priority has been on securing their future.

Ashu Khullar also added "We continue to remain committed to contributing to India’s growth and development as we deepen our presence through our institutional businesses and our community initiatives. Citi will also continue to harness India’s rich talent pool in the areas of technology, operations, analytics, finance and allied functional areas through its network of Citi solution centers that are located in five cities in India and support our global businesses".

Additional Reading: How to Close Axis Bank Credit Card?

Axis Bank said in a disclosure to the stock exchanges that it looks at this acquisition as a healthy strategic fit that will provide access to the large and affluent customer franchise of Citibank having a bouquet of fee-oriented and profitable segments.

The bank said that the acquired portfolio would increase its credit card customer base by around 31% with an additional 2.5 million cards, which will result in bolstering the cards balance sheet position to be amongst the top three players in the Indian market.

This deal comes almost a year after the Citibank had declared that it will exit its consumer franchises in 13 markets, consisting India, and refocus on its more profitable institutional and wealth management businesses. Citi’s Indian consumer banking business includes credit cards, home loans and retail banking.

Axis Bank has emerged as the lead buyer after beating its rivals like Kotak, another popular private lender in India which was reportedly more aggressive and had also submitted a bid lower than the Axis Bank’s.

Other factors were also considered prior to finalising the deal like job security for the current employees of Citigroup, competition concerns, and so on.

Amitabh Chaudhry, Axis Bank MD and CEO said that the acquisition will add an enviable retail franchise and a high-quality talent pool as they continue their journey towards becoming a premier financial services brand. 
Chaudhry added "The amplified scale and width of offerings, the diversified portfolio of products and global best practices will enhance customer experience, while greater synergies both on revenue and cost side will augment value for the new franchise".

Additional Reading: Axis Bank Shares Debt Restructuring & One Time Loan Settlement Options

According to the statement issued by Citigroup, the deal is expected to close in the first half of calendar year 2023, subject to requisite regulatory approvals. Citibank India ensured that it will be done in as seamless a manner as possible to prevent any immediate impact on its customers.

Citigroup added that after closing, Citi expects the transaction resulting in the release of approximately US$800 million of allocated tangible common equity. 

Peter Babej, Citi Asia Pacific CEO said the deal with Axis Bank is an important milestone. He said that as the company moves forward, India will continue to remain a key institutional market.

Babej further added "In line with our broader strategic repositioning, we will continue to support our institutional clients in this core market and across APAC, delivering the full power of our global network to enable their growth".