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Axis Bank set to bag Citi’s India retail business, deal announcement likely next week

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Axis Bank set to bag Citi’s India retail business, deal announcement likely next week

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Axis Bank is set to close a deal to acquire New York-headquartered Citibank’s consumer business in India as early as next week, two people directly in the know of the matter told CNBC-TV18.

Axis Bank is set to close a deal to acquire New York-headquartered Citibank’s consumer business in India as early as next week, two people directly in the know of the matter told CNBC-TV18.

At least two other players were in the fray, including Kotak Mahindra Bank and IndusInd Bank, but Axis Bank emerged as the frontrunner with the most lucrative offer on the table, people in the know said. The deal size is pegged at anywhere between $2 to 2.5 billion, and will include a portion as cash, and incentives as well, as per the people quoted earlier.
Citi will likely continue to service its customers during the integration period with Axis Bank, said another person in the know.
“We were targeting to close the deal this week itself, but there’s been some delay with paperwork, so it will be announced within a week,” said one of the people quoted earlier.
Legal firm Khaitan & Co is advising Axis Bank on this deal, whereas Citi is believed to have roped in AZB & Partners, CNBC-TV18 has learnt.
Citibank declined to comment on the development. Axis Bank’s comment was still awaited at the time of publishing this story.
Wall Street giant Citi had announced its intention to exit its consumer franchises in thirteen markets, including India last year. The decision was made with the aim of refocusing on its more lucrative institutional and wealth management businesses in these markets.
Citi’s Indian consumer banking business comprises a lucrative credit cards portfolio apart from home loans and retail banking. The global bank has 35 branches in India and close to 4,000 employees. Its customer base is about 2.5 million account holders with 1.2 million loan accounts.
What the deal means for Axis Bank
As per RBI data, Citibank had 2.6 million credit cards outstanding as of December 2021, compared to 8.1 million for Axis Bank. Axis Bank is currently the fourth largest credit card issuer in the country, after HDFC Bank, SBI Card, and ICICI Bank. Citibank is now the sixth largest credit card issuer, after steadily losing customers since it announced its exit from consumer banking in India.
Axis Bank currently commands 11.8 percent market share in outstanding credit cards and 8.1 percent share in credit card spends. Compared to this, Citibank had a 3.7 percent market share in outstanding credit cards, and a 4.3 percent share in credit card spends.
In this case, it’s not only the credit card volumes that matter but also the value of transactions that each card issuer processes.
While Axis Bank has close to three times the number of card holders that Citi does, the value of transactions it processes is only a little over two times higher.
Post the acquisition, Axis would be in a neck-to-neck fight with ICICI Bank to become the third-largest card issuer, while in terms of credit card spends, it would account for nearly 13 percent of the total.
As per an Edelweiss research report, Citibank’s credit card holders spend 30 percent more per card on average compared to the rest of the industry. With the Citi cards acquisition, Axis Bank may see the average credit card spends per user increase by nearly 23 percent, the report said.
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