Axis Bank officially takes over Citi Consumer Finance business

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Indian Market
by 5paisa Research Team Last Updated: 2022-08-08T19:03:21+05:30

Citigroup completed the sale of its Indian consumer banking businesses to Axis Bank for Rs.12,325 crore. This is part of Citigroup’s plan to exit consumer banking business across 13 markets, including India.

The consumer banking franchise of Citi that was sold to Axis bank includes the credit cards business, retail banking, wealth management and consumer loans. This is likely to give a qualitative shift to the portfolio of Axis Bank.

The deal will take about 1 year for full implementation and will be consummated by the first half of 2023. The deal will include the transfer of 3,600 employees of Citi also to Axis Bank. The deal excludes the institutional client business of Citi, which will continue to operate under the Citi banner.

For Axis Bank, the acquisition of the consumer banking business is likely to be all-round accretive in terms of numbers and market share.
 

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Consider some big shifts that Axis Bank will see. It will add 2.5 million Citi credit holders to its existing base of 8.6 million cards. This will position Axis among the top-4 in terms of credit card base.

Axis already has a retail book of Rs.400,000 crore and the Citi deal will help Axis Bank to add 3 million unique customers as well as add 21 branches and 499 ATMs across over 18 major cities in India.

Citi Wealth already has a wealth AUM of Rs.110,000 crore and that will help Axis Burgundy to augment its wealth management offering and make it the third largest in this space.
 

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In addition, Axis also gets Rs.68,000 crore of retail book of Citi, which includes retail loans of Rs.28,000 crore. What is more important for Axis Bank is that the deal will add about 1.2 million banking customers of Citi, most of them being in the affluent bracket.

It has been a long journey for Citi in India. It had first entered India in the year 1902, although the consumer banking business only started in 1985.

Going ahead, Citi will continue to focus on the institutional banking business as well as on offshoring or global business support rendered from Mumbai, Pune, Bengaluru, Chennai and Gurugram. It will add 7% to the deposit base of Axis Bank and 12% to its CASA deposits.

When Citi had announced plans to exit the consumer banking business last year, several banks had evinced interest including DBS Bank, ICICI Bank, Kotak Mahindra Bank, among others. However, Axis had given Citi the best deal overall.

With this deal, Axis will narrow the gap with the Big-3 in the credit cards business viz. HDFC Bank, SBI and ICICI Bank. For FY21, Citibank India had announced net profits of Rs.4,093 crore, across India business.

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