Citibank sells India retail business to Axis Bank for $1.6 billion

iNDICA News Service-

American finance major Citibank has agreed to sell its consumer businesses in India to Axis Bank, the country’s third largest private-sector bank, in an all-cash deal of Rs12,325 crore (about $1.625 billion) subject to regulatory approvals.

The boards of Citibank and Axis Bank have approved the deal, which comprises sale of the consumer businesses of Citibank India as well as the non-banking financial company Citicorp Finance (India) Ltd.

Citibank’s institutional client business in India is not part of the deal.

The sale is part of Citibank CEO Jane Fraser’s plan to overhaul the business by exiting retail banking operations in 13 countries where the bank does not have the scale to compete with other players.

“As we move forward with this transaction, India remains a key institutional market for Citi,” said Peter Babel, the bank’s Asia-Pacific CEO. “In line with our broader strategic repositioning, we will continue to support our institutional clients in this core market and across APAC.”

Once the regulatory approvals come through, Axis Bank will take over Citibank’s credit cards, retail banking, wealth management and consumer loans businesses along with Citicorp’s asset-backed financing business, which includes commercial vehicle and construction equipment loans, and personal loans.

“Axis Bank looks at this acquisition as a healthy strategic fit,” the bank said in a statement. “It will gain access to the large and affluent customer franchise of Citibank having a bouquet of fee-oriented and profitable segments that include quality credit card portfolio, affluent wealth management clientele, meaningful deposits with 81 percent being CASA [current and savings accounts], along with a strong consumer lending portfolio.”

Once the acquisition is completed, Axis Bank will have 28.5 million savings accounts, over 2.3 lakh ‘Burgundy’ customers and 10.6 million cards. The acquired portfolio would increase Axis Bank’s credit card customer base by 31 percent with an additional 2.5 million cards.

“With the required capabilities in place, it expects successful integration across all key parameters, including employees, customers, product offerings and technology, in a value-accretive manner,” the Axis statement further said.

“Additionally, the deal offers strategic advantages to the bank such as premiumization of its overall customer portfolio, increased opportunities to cross-sell its products and accelerated digital transformation.

“Moreover, the wealth and private banking portfolio will add great value to the ‘Axis Burgundy business, further accelerating its growth ambitions in that segment,” the statement continued. “Overall, the proposed transaction will add 7 percent to the bank’s deposit base and 4 percent increase in advances.”

The statement said a well-outlined ‘integration plan’ and a focused senior execution team will ensure smooth transition and seamless integration on all fronts.