Axis Bank acquires Citi's India consumer business in a Rs 12,325-cr deal

Acquisition of 3 million unique customers of Citibank India to enhance Axis Bank's presence in the key identified growth segments, the Mumbai-headquartered lender said

US bank Citigroup on Wednesday announced sale of its Indian consumer banking businesses, including credit cards, retail banking, wealth management and consumer loans, to private lender Axis Bank for Rs 12,325 crore, as part of its plans to exit retail operations in 13 markets.

The deal, which is expected to close in the first half of the 2023 calendar year, will include the transfer of about 3,600 Citi employees to Axis.

The sale excludes Citi's institutional client businesses in India, it said.

Axis Bank is the fourth-largest issuer of credit cards with a total base of 8.6 million cards and the deal will add about 2.5 million credit cardholders, making it one of the top three cards businesses in the country, the private lender said in a separate statement.

Axis, which has a retail book of nearly Rs 4 trillion, will acquire about 3 million unique customers of Citibank India, seven offices, 21 branches and 499 ATMs across 18 cities.

"Valuable addition of Rs 1.11 trillion AUM from Citi Wealth & Private Banking products to augment and reinforce Axis’ Burgundy brand, making it the 3rd largest by combined AUM in the wealth management space," said Axis Bank in a statement.

Citi's retail book is nearly Rs 68,000 crore, of which retail loans account for Rs 28,000 crore. With 1.2 million bank accounts, the total India business contributes 1.5 per cent in profit to the lender's global book.

"Axis Bank's large loan book would be complemented by Citibank's affluent customer segment, creating product and branch footprint synergies," the private lender said. "Post the acquisition, Axis Bank will have 2.85 crore savings accounts, 2.3 lakh+ Burgundy customers and 1.06 crore cards." Citibank's customers, it said, will continue to avail all the rewards, privileges, and offers to which they were previously entitled.

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.

Citi entered India in 1902 and started the consumer banking business in 1985.

Apart from the institutional banking business, it will continue to focus on offshoring or global business support rendered from centres in Mumbai, Pune, Bengaluru, Chennai and Gurugram.

For the fiscal year ended March 31, 2021, Citibank India reported a net profit of Rs 4,093 crore, down from Rs 4,918 crore in the preceding fiscal year. It has 35 branches across the country.

As of March 31, 2021, the bank's concentration of non-performing assets (NPAs) stood at Rs 143.34 crore, involving exposure to top-four NPA (non-performing asset) accounts. While the gross NPAs stood at Rs 990.94 crore.

Its retail bank serves people across the spectrum, including the salaried and the high networth individuals, through dedicated offerings.

Post the acquisition, AxisBank will have 28.5 million savings accounts, over 230,000 Burgundy customers and 10.6 million Cards.

On an overall basis, the proposed transaction will add 7% to the Bank’s deposit base (with 12% increase in CASA) and 4% increase in advances, said Axis Bank.

Amitabh Chaudhry, MD & CEO, Axis Bank said: “We are delighted with the addition of an enviable retail franchise and a high-quality talent pool as we continue our journey towards becoming a premier financial services brand. This is a significant milestone in Axis’ journey of growth and leadership and will bring in great value for all stakeholders. The amplified scale and width of offerings, the diversified portfolio of products and global best practices will enhance customer experience, while greater synergies both on revenue and cost side will augment value for the new franchise.

"We look forward to collaborating with Citi’s experienced senior leadership team and diverse talent pool, as they join Axis’ 86,000+ strong, dedicated workforce. Axis Bank already has a rich network of Citi alumni across the hierarchy, which reflects cultural alignment between the two organizations. Given the expertise that Citi employees bring to the table, we view them as a significant addition to our existing team.”

In April 2021, American banking major Citigroup announced its plan to exit from the consumer banking business in India as part of its global strategy.

The business comprises credit cards, retail banking, home loans and wealth management. The bank has 35 branches in the country and employs about 4,000 people in the consumer banking business.

Citigroup had entered India in 1902 and started the consumer banking business in 1985.

Apart from the institutional banking business, Citigroup in India will continue to focus on offshoring or global business support rendered from centres in Mumbai, Pune, Bengaluru, Chennai and Gurugram.

Last year, Citi decided to exit retail banking from India and 12 other markets, citing lack of scale to compete. After that decision, Citi decided to sell its assets, which evinced huge interest from several players like DBS Bank, ICICI Bank, Kotak Mahindra Bank, among others.

With this deal, Axis will narrow the gap with its main rivals in the credit card business. HDFC Bank is the largest card issuer in the country with 16.27 million cards, followed by SBI Card (13.52 million) and ICICI Bank (12.77 million).

In terms of credit card spend market share, HDFC Bank has 24.8% market share, followed by SBI Card (21.5%) and ICICI Bank (20%) as of January 2022.

Credit cards have been growing very strongly as the country is recovering from the pandemic.

Citi India CEO, Ashu Khullar said: “We are extremely pleased with this outcome for our consumer colleagues and clients. Axis Bank is committed to building its consumer banking business in India and is backed by a strong market presence. We believe Axis Bank will provide our employees an excellent environment to build their careers and shall meet all the financial needs of our consumer clients.

"We continue to remain committed to contributing to India’s growth and development as we deepen our presence through our institutional businesses and our community initiatives. Citi will also continue to harness India’s rich talent pool in the areas of Technology, Operations, Analytics, Finance and allied functional areas through its network of Citi Solution Centers that are located in five cities in India and support our global businesses.”