What does the Axis-Citi deal mean for Citi's India customers?

On 30th March, Axis Bank, India’s third-largest private sector lender, snapped up Citibank's consumer business in India for 1.6 billion dollars. The all-cash deal included credit cards, retail banking, wealth management and consumer loans.

The transaction also included the sale of Citicorp Finance (India) Limited’s consumer business. Citicorp is a non-bank financial company under Citi. Its asset-backed financing business includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio.

The transaction, however, excluded Citi’s institutional client businesses in India. In a statement, Citi said that the company remains committed on serving institutional clients in India and globally.

“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 quality credit card portfolio, affluent wealth management clientele, meaningful deposits with 81% being CASA, along with a strong consumer lending portfolio” – Axis Bank, in a statement   

Axis Bank will have access to the large and affluent customer franchise of Citibank having a bouquet of fee-oriented and profitable segments that include quality credit card portfolio, affluent wealth management clientele, along with a strong consumer lending portfolio, the bank said in a statement.

Citibank India serves 2.9 million retail customers. It has 1.2 million bank accounts and caters to 3,000 corporate clients.

Citi’s credit card portfolio is largely made up of high networth customers. Ever since reports emerged of the deal, banking analysts indicated this fact as one of the key attractions for Axis Bank.
Average spends per card for Citibank remains 1.4 times higher than the industry average.

It’s also a question of scale.
As of February 2022, Axis Bank had 8.6 million credit cards outstanding and Citi had 2.554 million. Combined, they form the fourth largest credit card portfolio in Indian banking.
So, it becomes clear that the deal will enable Axis Bank to close in on ICICI Bank, its nearest competitor. As of February, ICICI Bank had a credit card portfolio of around 12.77 million cards.  

Axis Bank chief executive Amitabh Chaudhry called the acquisition a “deal of a lifetime”. According to media reports, the buyout will give the bank access to 2.5 million Citibank customer cards and result in an increase of around 31% to its existing card base. Customers of Citibank, however, can continue to enjoy all the rewards, privileges, and offers to which they were earlier entitled.

The Axis-Citi transaction is expected to close in the first half of calendar year 2023, subject to requisite regulatory approvals. 
 

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