Citi India’s retail assets acquired by Axis Bank | Value Research Customers of Citi India can continue to enjoy all of the benefits and offerings but are required to give consent to become Axis Bank’s customers

Citi India's retail assets acquired by Axis Bank

Customers of Citi India can continue to enjoy all of the benefits and offerings but are required to give consent to become Axis Bank's customers

Axis Bank, India's third-largest private sector bank, has acquired the retail assets of Citi India for a whopping $1.6 billion or Rs 12,325 crore. Axis Bank will take over retail banking, loans, credit cards, loans, and wealth management operations. This is the largest deal in the banking space since Kotak Mahindra Bank acquired ING Vysya Bank for Rs 15,000 crore.

Axis Bank's Managing Director, Amitabh Chaudhry stated that Citi India's customers can continue to avail all the privileges and offers that they had prior to the acquisition. If their customers are satisfied with Axis Bank taking over the operations, their accounts and credit cards can change, else they can terminate their relationship with the bank and exit with their deposits. All the Citibank customers will have to give consent to become customers of Axis Bank.

Here are some key points that you may want to know:

  • The total consideration of Rs 12,325 crore will be paid. This will cover loans, credit cards, retail banking and wealth management business.
  • Around 30 lakh unique customers will be acquired.
  • With the addition of 25 lakh cards, Axis Bank's credit card base will increase by 31 per cent. Prior to this, the bank had around 81 lakh credit cards. This deal would make them one of the top three card issuers in the country.
  • Total deposits of Rs 50,200 crore will be added out of which 81 per cent is CASA (Current Account and Savings Account).
  • Rs 1,10,900 crore worth of assets under management will be added from Citi's wealth management and private banking products.
  • 1600+ Suvidha corporate salary accounts with an average salary of Rs 70,000 per month will be added.
  • Axis Bank will have access to 7 offices, 21 branches, 499 ATMs and 3,600 employees across 18 cities.
  • Post-acquisition, Axis Bank will have 2.85 crore savings accounts, 2.3 lakh burgundy customers and 1.06 crore cards.
  • The whole transaction will increase the bank's deposit base by 7 per cent with CASA increasing by 12 per cent, and an increase in advances by 4 per cent.

Why is CitiBank leaving India?
In April 2021, the US banking major CitiBank announced that it is exiting retail operations in India. This was part of their decision to exit from 13 countries across Asia and Europe. The other markets from which the bank is exiting are Australia, China, Russia, Indonesia, Korea, Bahrain, Malaysia, Philippines, Poland, Taiwan, Thailand, and Vietnam. The reason is due to intense competition from local banks and declining share in the retail base. While the local rivals were growing their retail business, CitiBank found it extremely difficult to hold on with decreasing interest income.

Citi India's CEO, Ashu Kullar stated that the institutional business where the bank provides services to corporates would continue as it does not require a wider presence, higher number of employees, and is a relatively safer space compared to retail banking.

Axis Bank closed at a price to earnings of 18.2 times and price to book value of 2.0 times with a total market capitalisation of Rs 2,30,292.5 crore on March 30, 2022.

Other Categories