On Wednesday, Axis Bank said that its Board of Directors had approved the acquisition of Citibank’s consumer businesses in India for a cash consideration of roughly Rs 12,325 crore. Citibank India’s consumer operations, including credit cards, retail banking, wealth management, and consumer loans, would be sold as part of the deal, according to a statement released here.
“The bank will pay a consideration of Rs 12,325 crore to Citibank for the acquisition,” it said.
The agreement also comprises the sale of Citicorp Finance’s (India) consumer business, which includes the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio. Citi had announced earlier in the day that it had signed an agreement with Axis Bank for the sale of its consumer businesses in India for a cash consideration of USD 1.6 billion in a separate announcement. Citi chose Axis after a lengthy and competitive auction procedure, according to the statement. Citi’s institutional customer operations in India, however, are not included in the deal, according to the firm, which said that it remains dedicated and focused on serving institutional clients in India and throughout the world.
“Axis Bank looks at this acquisition as 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 a quality credit card portfolio, affluent wealth management clientele, meaningful deposits with 81 per cent being CASA, along with a strong consumer lending portfolio,” Axis Bank said in the statement.
Post the acquisition, 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, which will in turn bolster the cards balance sheet position to be amongst the top 3 players in the Indian market. Moreover, the wealth and private banking portfolio will add great value to the Axis Burgundy business, further accelerating its growth ambitions in that segment.
“On an overall basis, the proposed transaction will add 7 per cent to the Bank’s deposit base, with a 12 percent increase in CASA and 4 percent increase in advances,” it said. “The bank has made large investments in people, processes and technology over the past few years. With all 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,” Axis Bank said.
In addition, roughly 3,600 Citi workers who serve Citi’s consumer operations in India would shift to Axis when the proposed merger is completed. Additionally, the acquisition provides the bank with strategic benefits such as premiumization of its total client portfolio, improved cross-selling opportunities, and faster digital transformation. Subject to regulatory clearances, the deal is scheduled to conclude in the first part of the calendar year 2023.
“This announcement is only the start of a process, and while there will be a transition, Citi will ensure that it is done in as seamless a manner as possible, with due notice. There will be no immediate impact on the services to the customers of Citi’s consumer businesses in India,” Citi had said. Citi anticipates the deal to release roughly USD 800 million in allocated tangible common stock when it closes. Citi’s worldwide withdrawal from its consumer banking franchises in 13 locations spanning Asia and EMEA, as previously disclosed, is projected to release about USD 7 billion of allocated tangible common stock over time, according to the company. Axis Bank and Citibank will work together to guarantee that excellent customer service levels are maintained across all client channels, even after the transaction has closed.
