In a regulatory filing, the bank said that it is looking to surrender the banking license by end of April 2021, which has been reviewed with the UK regulators -- both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA)
Private sector lender Axis Bank on Thursday said it will fully wind down and close operations of its subsidiary in the United Kingdom (UK) as it focuses on the Indian banking sector.
In a regulatory filing, the bank said that it is looking to surrender the banking license by end of April 2021, which has been reviewed with the UK regulators -- both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).
“This is to inform you that Axis Bank Ltd has been reviewing its international strategy and as part of this has adopted a clear objective to focus on the Indian banking market and harness the potential there," it said.
Axis Bank UK Ltd, launched in 2013, posted a net profit after tax of ₹49.06 crore on the back of ₹297.97 crore in total income in FY19. According to data available on the bank’s FY19 annual report, the subsidiary had total liabilities of ₹4,903.98 crore and assets of ₹5,726.55 crore. The lender is yet to release its FY20 annual report and these are the latest available numbers on the subsidiary.
The bank said in its statement on Thursday that it will ensure transparency and fairness in dealing with all its employees and customers of Axis Bank UK Ltd, throughout this wind down process.
“Kindly note that Axis Bank UK Ltd is not a material subsidiary of the bank, in terms of the listing regulation and that the above decision will not have any material impact on the operations or the financial position of the bank," it said.
Indian banks have, over the last couple of years, been closing down their foreign subsidiaries and branches as they try and conserve capital in a challenging economic environment. Last month, state-owned Bank of Baroda (BoB) closed down its Ghana and surrendered its licence.
On 26 June, S &P Global Ratings downgraded ratings of Axis Bank and four Indian non-bank financiers, citing worsening operating conditions as a result of the covid-19 pandemic.
Axis Bank’s issuer credit rating was cut one notch to BB+, indicating junk status. S&P said the rating action reflects its expectation that heightened economic risks facing India’s banking system will affect the lender’s asset quality and financial performance.
“While Axis’ asset quality is superior to the Indian banking sector average, its level of non-performing assets (NPAs) will likely remain high compared to international peers. Nevertheless, we expect the bank to maintain its strong market position and adequate capitalization," said S&P.
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