Indian private lender Axis Bank has agreed to acquire Citibank’s Indian consumer business for $1.6bn in an all-cash transaction. The deal marks the latest retreat of the US banking giant from its retail operations in 13 countries.
This is one of the largest deals in the Indian banking sector since the acquisition of ING Vysya by Kotak Mahindra Bank for INR 15,000 crores in 2014.
The deal includes the sale of Citi’s credit cards, retail banking, wealth management, and consumer loans businesses. “The transaction 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,” Citigroup said.
Axis Bank gets access to Citi’s 2.55 million credit card portfolio taking its total card count to over 11 million. This will allow Axis to rise to the number three position in terms of consumer spend per card. Citi Bank typically has had a more affluent client which is reflected in this metric.
Citibank will however continue to retain its Institutional Client businesses in India noting that “Citi remains committed and focused on serving institutional clients in India and globally”.
The exit is part of a broader strategy revamp under the new CEO Jane Fraser who had commissioned the exit of Citi’s consumer franchises in 13 markets as she took on her new role last year.
The deal will eventually free up over $800 million of allocated tangible common equity.
Citi Asia Pacific CEO Peter Babej said the deal with Axis is an “important milestone”. As the company moves forward, India will continue to remain a “key institutional market”, he said.
“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,” Babej further added.
The deal is expected to be closed in about 18 months with about 9-12 months required just to get the requisite regulatory approvals. Axis Bank has also assured Citi’s existing clients that they will ensure that the transition is done smoothly.
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