According to sources, Axis Bank is all set to acquire Citi India’s retail assets for $2 billion. Citi India’s retail business includes credit cards, wealth management and retail customer accounts. The deal, where Axis Bank is set to acquire Citi’s consumer business in India, will have milestone payments. According to sources, the private sector lender will formally announce the decision on Wednesday, March 30.
According to sources cited by CNBC-TV18, Citibank may continue to serve its customers during the integration period, so that the transition goes smoothly and no account holders are affected in the process. The deal will add to Citi’s attractive customer base of 2.6 million credit card holders.
Axis Bank said that day that it would hold a press conference after market hours on Monday at 4:15 pm, while Citi declined to comment on the report. Citi Asia Pacific CEO Peter Babbage reportedly arrived in Mumbai last evening and is likely to be present during the announcement.
As mentioned earlier, under the second part of the transaction deal with Axis Bank, Citi will continue to serve its customers for a period of approximately 12 to 18 months, reported The Financial Express. In the first part of the Citi-Axis deal, it will become effective six months from the date of the announcement. Payment will be made on the basis of existing metrics of the business. Under the second part of the deal, which is the bulk of the transaction, a service agreement will be created to provide seamless services to Citi customers in India.
In April last year, the US banking major announced its plans to exit the consumer banking business in 13 countries to focus on four wealthier regions, including Singapore, Hong Kong, the United Arab Emirates and London. As part of this announcement, Citigroup’s India business was closed. “As a result of the ongoing refresh of our strategy, we have decided that we are going to double the funding. We will operate our consumer banking franchise in Asia and EMEA from only four wealth centers, Singapore, Hong Kong, UAE and London.”
As of March 31 last year, Citi had borrowings of Rs 68,747 crore in India, while its deposits stood at Rs 1.66 trillion. As of February, the lender’s credit card count stood at 2.55 million, according to data from the Reserve Bank of India.
Axis Bank was allowed to acquire Citigroup’s retail business in India after it defeated its rival Kotak Group, which had reportedly shown “more aggressive” behavior and made lower bids than Axis. The final call was also taken after considering other factors. Like competition concerns and job security of current City employees in India.
Citigroup’s Indian business includes credit cards, retail banking, home loans and wealth management. The bank has 35 branches in the country and has an employee base of around 4,000 people in the consumer banking business. In addition to the institutional banking business, Citigroup in India will continue to focus on offshoring or global business support provided from centers in Mumbai, Pune, Bengaluru, Chennai and Gurugram.
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