Axis Bank to buy Citis retail biz in India for Rs 12325 cr to close gap with rivals
Mumbai Mar 30 PTI Axis Bank on Wednesday said it will acquire US-based Citis consumer business in India for Rs 12325 crore in one of the largest deals in the Indian financial services space which will help it close the gap with larger peers like ICICI Bank and HDFC Bank The two lenders signed a definitive agreement for the sale which will involve the third largest private lender taking over Citis credit cards personal loans and wealth management businesses that are focused on the affluent segment Regulatory approvals are expected in nine months after which the payment will be made and a complex integration process will begin Axis Bank has grown organically all these years and has scaled well But our aspirations are bigger This deal gives us that strategic thrust to close the gap between us and some of our peers its chief executive and managing director Amitabh Chaudhry told reporters Apart from a consideration of Rs 12325 crore or USD 16 billion which will be paid using the balance sheet strength the deal also involves an equity requirement of Rs 3450 crore for the loan book of over Rs 27400 crore which will get transferred and also a payout of up to Rs 1500 crore in integration cost which will be paid by Axis to Citi for servicing the business till the merger gets complete The domestic lenders core capital will be impacted by 180 per cent and it will raise capital a few months down the line Chaudhry said Axis Bank is keen to absorb nearly all the 3600 employees working for the consumer banking business of Citi and will be eventually making offers to them at par with their current emoluments and also raise the payouts to its existing employees for parity Chaudhry said The deal which is estimated to get over by September 2024 once the integration is complete will help the domestic lender gain access to 30 lakh new customers which include 25 lakh high-spending credit cards and also up the assets under management of its wealth management offering Burgundy by adding Rs 11 lakh crore of money Citis retail book is nearly Rs 68000 crore of which retail loans account for Rs 28000 crore Axis Bank said its card business will become one of the top three in the country after the integration of Citi Citi has been in India since 1902 and started its consumer banking activities in 1985 From a customers perspective all the privileges loyalty points and services will remain the same provided they consent to be serviced by Axis Bank Chaudhry said that all the 21 branches in prime locations will be retained The American lender is exiting the business which delivered a post-tax profit of Rs 842 crore in 2020 as part of a move to exit retail businesses in 13 markets globally and release capital It will continue to operate the wholesale and institutional businesses in the country and also use it as a back-office to support global business which currently operates from five centres Ashu Khullar the India chief executive for Citi assured that even after the sale of the consumer-facing business it will deepen its presence through institutional business and community initiatives The move which comes in line with many peers in the foreign lenders space either exiting or part-exiting Indian operations will also help Axis with access to long-standing relationships of Citis that include 1600 tie-ups with corporates to offer salary accounts and also deposits of over Rs 50200 crore of which 81 per cent are the low-cost current and savings account balances Chaudhry termed the deal a once in a lifetime opportunity which it went in for because of the advantages it offers to grow the business A senior official said teams from the two banks were in touch for over six months before the signing of the agreement on Wednesday Others in the fray included Kotak Mahindra Bank and Singapores DBS Bank Approvals for the deal will have to come from Axis Banks shareholders Reserve Bank Competition Commission of India and others The deal was termed as margin-accretive by Axis Banks chief financial officer Puneet Sharma who said it will contribute over 6 per cent to the banks net interest income Sharma however also hinted that more than the interest income it is possibilities on the fees and non-interest income front which were a big draw for Axis Bank Acknowledging the concerns around attrition of customers which is believed to have started ever since Citi announced an exit over nine months ago Chaudhry said there are clauses in the agreement wherein the consideration amount will go down if the size of the business shrinks below a threshold which was undisclosed by him There are also exit clauses where either of the parties can walk away from the deal he added The last deal of this size was the Rs 12500-crore merger between Kotak Mahindra Bank and ING Vysya Bank or the RBI-backed merger between DBS Bank India and Lakshmi Vilas Bank Ahead of the press conference to announce the deal Axis Bank scrip gained 172 per cent to close at Rs 75020 apiece on BSE on Wednesday PTI AA DP MR MR
Mumbai Mar 30 PTI Axis Bank on Wednesday said it will acquire US-based Citis consumer business in India for Rs 12325 crore in one of the largest deals in the Indian financial services space which will help it close the gap with larger peers like ICICI Bank and HDFC Bank The two lenders signed a definitive agreement for the sale which will involve the third largest private lender taking over Citis credit cards personal loans and wealth management businesses that are focused on the affluent segment Regulatory approvals are expected in nine months after which the payment will be made and a complex integration process will begin Axis Bank has grown organically all these years and has scaled well But our aspirations are bigger This deal gives us that strategic thrust to close the gap between us and some of our peers its chief executive and managing director Amitabh Chaudhry told reporters Apart from a consideration of Rs 12325 crore or USD 16 billion which will be paid using the balance sheet strength the deal also involves an equity requirement of Rs 3450 crore for the loan book of over Rs 27400 crore which will get transferred and also a payout of up to Rs 1500 crore in integration cost which will be paid by Axis to Citi for servicing the business till the merger gets complete The domestic lenders core capital will be impacted by 180 per cent and it will raise capital a few months down the line Chaudhry said Axis Bank is keen to absorb nearly all the 3600 employees working for the consumer banking business of Citi and will be eventually making offers to them at par with their current emoluments and also raise the payouts to its existing employees for parity Chaudhry said The deal which is estimated to get over by September 2024 once the integration is complete will help the domestic lender gain access to 30 lakh new customers which include 25 lakh high-spending credit cards and also up the assets under management of its wealth management offering Burgundy by adding Rs 11 lakh crore of money Citis retail book is nearly Rs 68000 crore of which retail loans account for Rs 28000 crore Axis Bank said its card business will become one of the top three in the country after the integration of Citi Citi has been in India since 1902 and started its consumer banking activities in 1985 From a customers perspective all the privileges loyalty points and services will remain the same provided they consent to be serviced by Axis Bank Chaudhry said that all the 21 branches in prime locations will be retained The American lender is exiting the business which delivered a post-tax profit of Rs 842 crore in 2020 as part of a move to exit retail businesses in 13 markets globally and release capital It will continue to operate the wholesale and institutional businesses in the country and also use it as a back-office to support global business which currently operates from five centres Ashu Khullar the India chief executive for Citi assured that even after the sale of the consumer-facing business it will deepen its presence through institutional business and community initiatives The move which comes in line with many peers in the foreign lenders space either exiting or part-exiting Indian operations will also help Axis with access to long-standing relationships of Citis that include 1600 tie-ups with corporates to offer salary accounts and also deposits of over Rs 50200 crore of which 81 per cent are the low-cost current and savings account balances Chaudhry termed the deal a once in a lifetime opportunity which it went in for because of the advantages it offers to grow the business A senior official said teams from the two banks were in touch for over six months before the signing of the agreement on Wednesday Others in the fray included Kotak Mahindra Bank and Singapores DBS Bank Approvals for the deal will have to come from Axis Banks shareholders Reserve Bank Competition Commission of India and others The deal was termed as margin-accretive by Axis Banks chief financial officer Puneet Sharma who said it will contribute over 6 per cent to the banks net interest income Sharma however also hinted that more than the interest income it is possibilities on the fees and non-interest income front which were a big draw for Axis Bank Acknowledging the concerns around attrition of customers which is believed to have started ever since Citi announced an exit over nine months ago Chaudhry said there are clauses in the agreement wherein the consideration amount will go down if the size of the business shrinks below a threshold which was undisclosed by him There are also exit clauses where either of the parties can walk away from the deal he added The last deal of this size was the Rs 12500-crore merger between Kotak Mahindra Bank and ING Vysya Bank or the RBI-backed merger between DBS Bank India and Lakshmi Vilas Bank Ahead of the press conference to announce the deal Axis Bank scrip gained 172 per cent to close at Rs 75020 apiece on BSE on Wednesday PTI AA DP MR MR
