Axis Bank to Take Over Citi Consumer Business

If reports are to be believed in the market, the deal to acquire Citibank’s India consumer business may close as early as the current month of January 2022 itself. The Citi India consumer business is expected to be valued at around $1.5 billion or close to Rs.11,000 crore. This is yet to be confirmed and is largely based on reports coming in.

Apparently, two names had been shortlisted to buy the Citi India consumer  business viz. Axis Bank and Kotak Mahindra Bank. However, it is reported that the bid put in by Axis Bank was higher than that of Kotak Bank. Hence Citibank was more favourably disposed towards accepting the Axis Bank bid. Final confirmation on this subject is still awaited.

Citi had taken a broad based decision to exit its consumer franchise across 13 markets and India was one of them. As a consequence, it was decided to exit the Citi India consumer business subject to finding a good buyer willing to pay a reasonable price for the strong franchise. Citi is one of the oldest players in the consumer lending business in India.

The consume finance business of Citi broadly comprises of credit cards, home loans as well as retail banking. Over the years, Citi had gradually lost market share in these businesses to the entrenched Indian players like SBI, ICICI and HDFC, making it increasingly unviable for Citi to continue. For now, Citi wants to focus its bandwidth and energies more on the lucrative institutional business as well as the fast growing wealth management business.

Axis Bank is India’s third largest private sector lender after HDFC Bank and ICICI Bank. However, Axis has been looking to pad up its high end credit and mortgage business and for that Citi consumer banking business will be the perfect fit. In fact, Citi had introduced credit cards in India way back in 1987 and has been a virtual pioneer in that business.

Citibank currently has a portfolio of 25.70 lakh credit cards in India with most of them being high quality customers across the metros. In numerical terms, this is less than one-third the credit card customer base of 79 lakhs that Axis Bank already has. However, the advantage that Citi brings to the table is a higher quality of clientele as well as a higher ratio of spending per card. That would be an advantage for Axis Bank.

Citi’s total retail loan book in India, predominantly comprising of home finance and asset finance, stands at Rs.21,600 crore. That would certainly be a quantitative as well as a qualitative boost to the fortunes of Axis Bank.