Private sector lender Axis Bank is acquiring Citibank’s consumer banking business in India for Rs 12,325 crore, as it looks to strengthen its market position and take on bigger rivals. The sale of the India consumer banking business of Citibank will include credit cards, retail banking, wealth management and consumer loans.
The deal also includes the sale of the consumer business of Citi’s non-banking financial company, Citicorp Finance (India) Limited, comprising the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio.
The sale of the India retail banking business is a part of an ongoing strategy under Citigroup CEO Jane Fraser to simplify the group and focus on high-growth businesses.
It was in April 2021 that Citi had announced plans to sell its retail banking business in 13 countries, including India. In January, it agreed to sell its consumer bank in Taiwan to DBS and its consumer bank in Indonesia, Malaysia, Thailand and Vietnam to UOB Group.
Close to 3,600 Citi employees in India will be absorbed by Axis Bank as a part of the deal.
Axis Bank said this acquisition is a “healthy strategic fit.” “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 per cent being CASA (current account and savings account), along with a strong consumer lending portfolio,” the Mumbai-based lender said.
The Citibank deal will help Axis Bank acquire three million unique customers. Axis Bank’s cards balance sheet will grow 57 per cent with the addition of 2.5 million Citibank cards, making it one of the top three cards businesses in India.
Axis Bank’s aggregate deposits will go up by Rs 50,200 crore, while its salary business is also expected to get a big boost with the addition of more than 1,600 Suvidha corporate relationship accounts from Citi with over 1 million customers and an average salary of Rs 70,000 per month.
As a part of the deal, Axis Bank will also get access to seven offices, 21 branches and 499 ATMs of Citibank in India.
“This is a significant milestone in Axis’ journey of growth and leadership and will bring in great value for all stakeholders. 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,” said Amitabh Chaudhry, MD and CEO, Axis Bank.
Citi, however, is not selling its institutional client business in India.
“We believe Axis Bank will provide our employees an excellent environment to build their careers and shall meet all the financial needs of our consumer clients. 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,” said Ashu Khullar, CEO of Citi India.
Khullar said 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 located in five cities and support its global businesses.
Ahead of the deal, Axis Bank shares closed 1.7 per cent higher at Rs 750.
Axis Bank expects the deal to close in the fourth quarter of the year ending March 2023 and is estimated to be earnings accretive in calendar 2024.
