Private sector lender Axis Bank has agreed to acquire Citibank's consumer business in India for Rs 12,325 crore ($1.62 billion), in an all-cash deal, which includes Citi’s credit cards, retail banking, wealth management and consumer loan business, both lenders announced in a joint statement.
“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,” the statement said.
The deal excludes Citi’s institutional client businesses in India, it added.
US private equity player Bain Capital is a key shareholder with 4.24% stake and Government of Singapore (GIC) holds 1.59% in Axis Bank. The bank’s other shareholders include Life Insurance Corporation of India holds 8.16%, Government’s Specified Undertaking of the Unit Trust of India (SUUTI) owns 1.55%.
Axis Bank was selected by Citi following a competitive auction process. The portfolio evinced interest from players including DBS Bank, ICICI Bank and Kotak Mahindra Bank, among others.
Citigroup Inc, which started its consumer banking business in India 120 years ago, said it would sell its Indian consumer businesses to private lender Axis Bank as the U.S. bank exits retail operations in 13 markets. India is among the six countries where Citi has shut down its consumer banking operations, as announced in April last year.
Upon closing the deal, Citi expects the transaction to result in the release of approximately $800 million (over Rs 6,000 crore) of allocated tangible common equity.
“As we move forward with this transaction, India remains a key institutional market for Citi,” said Peter Babej, Citi Asia Pacific CEO.
Presently, Citibank India operates 35 branches serving 2.9 million retail customers with 1.2 million bank accounts. It also caters to 3,000 corporate clients.
Meanwhile, Axis Bank, which has a credit card base of 8.6 million, will add another 2.55 million from Citi after acquisition and thereby aims to become the third largest credit card player in the market. Currently, HDFC Bank is the largest credit card issuer at 16.27 million cards followed by State Bank of India at 13.52 million cards and ICICI Bank at 12.77 million cards.
"We will make an offer to all the 3600 employees which are part of the Citi's consumer business," said Amitabh Chaudhry, CEO and MD of Axis Bank, in a media conference.
Citi’s Banking, Capital Markets and Advisory Group is acting as exclusive financial advisor to Citi in respect of the transaction.
Besides India, the countries it decided to exit the retail segment in Australia, Bahrain, China, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
In January this year, Citi sold the consumer verticals at Indonesia, Malaysia, Thailand and Vietnam to UOB Group and its Philippines consumer division to the UnionBank of Philippines a month prior to that.
Citigroup had said it would focus on four wealth centres in Singapore, Hong Kong, the UAE and London.
"As was previously announced, Citi’s global exit from its consumer banking franchises in 13 markets across Asia and EMEA is expected to release approximately $7 billion of allocated tangible common equity over time," the global bank said.
Citigroup had previously said that the decision, taken as part of an ongoing strategic review, will allow Citi to direct investments and resources to the businesses where it has the greatest scale and growth potential.
As on 31 March 2021, Citi had loans of Rs 68,747 crore in India and deposits of Rs 1.66 trillion. Its total number of credit cards stood at 2.55 million in February, data from the Reserve Bank of India (RBI) showed. In India, Citi had begun operations in 1902 in Kolkata.
