Axis Bank to Acquire Retail Assets of Citi India for $2 Billion

Private lender Axis Bank has acquired the retail assets of Citi India, valuing the business at nearly $2 billion, people briefed have said. The deal will be announced today.

ET had first reported in October that Axis Bank, Kotak Mahindra Bank and IndusInd Bank had submitted binding bids for Citi’s consumer business in India. DBS, ICICI Bank and HDFC Bank of Singapore had assessed the prospects of a deal, but ultimately did not make an offer.

Axis Bank is the fourth largest credit card issuer with a total base of 8.6 million cards. Its retail book is nearly Rs 4 lakh crore. On the other hand, Kotak has a card base of 3 million.

Citi’s retail book is nearly Rs 68,000 crore, of which retail loans are Rs 28,000 crore.

Although Citi is the sixth largest card issuer in India, it has lost market share in card spending – from 20% a decade ago to 4% now. However, it has consistently seen 15-25% higher spend per card compared to the industry average, according to analysis by Macquarie. A mix of premium account and corporate salary cards in the wallet makes the Citi business attractive to bidders.

Citi’s consumer business in India includes credit cards, retail banking, home loans and wealth management. The bank has 35 branches in the country and employs 4,000 people in the retail banking sector. It contributes one-third to overall activity, but in terms of profitability, corporate banking represents more than 80%.

Overall, Citibank’s India unit had an advance and deposit market share of 0.6% and 1.1%, respectively. In India, Citibank has more than 2.5 million retail customers and 1.2 million bank accounts. The total business in India contributes 1.5% of profits to the lender’s overall portfolio.

Citibank, under its first female CEO, Jane Fraser, has decided to exit retail operations in 13 markets to conserve capital and focus on higher yielding revenue streams. Citi management has indicated that the exit process is currently underway and that while it will seek to complete these separations in a timely manner, the retreats would be nothing like so-called fire sales.

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