Private lender Axis Bank has acquired Citi India’s retail assets, valuing the business at nearly $2 billion.
Axis will pay Citi cash consideration of approximately $1.6 billion for the acquisition of the consumer business, subject to customary closing adjustments, a Citi press release noted.
The transaction comprises the sale of the consumer banking businesses of Citibank India, which includes credit cards, retail banking, wealth management and consumer loans.
It 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.
“Our announced transaction with Axis, a leader in Indian financial services, represents an important milestone for our franchise and offers an excellent opportunity to our consumer banking colleagues in India. As we move forward with this transaction, India remains a key institutional market for Citi,” Peter Babej, Citi Asia Pacific CEO, said.
The deal excludes Citi’s institutional client businesses in India; Citi remains committed and focused on serving institutional clients in India and globally.
Approximately 3,600 Citi employees supporting the consumer businesses in India, will transfer to Axis upon completion of the proposed transaction.
The transaction is expected to close in the first half of calendar year 2023 subject to requisite regulatory approvals.
Axis Bank is the fourth-largest issuer of credit cards with a total base of 8.6 million cards. Its retail book is nearly Rs 4 lakh crore.
Citi’s retail book is nearly Rs 68,000 crore, of which retail loans account for Rs 28,000 crore.
Citi’s consumer business in India comprises credit cards, retail banking, home loans and wealth management. The bank has 35 branches in the country and employs 4,000 people in the consumer banking business. It contributes a third to overall business but in terms of profitability, corporate banking accounts for more than 80%.
Overall, Citibank’s India unit had a market share of advances and deposits 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 India business contributes 1.5% in profit to the lender’s global book.
Citibank, under its first woman CEO Jane Fraser, decided to exit retail businesses in 13 markets to conserve capital and focus on higher-yielding revenue streams. The Citi management has indicated that the exit process is currently on and that while it will look to complete these separations in a timely manner, the retreats wouldn’t be anything akin to so-called fire sales.