By Malini Bhupta
Axis Bank is set to acquire Citibank’s credit card division in India. The deal contours have been finalised and is likely to be announced this week. It will become effective six months from the date of the announcement and the payment will be on the basis of the metrics of the business at present.
Citi has been consistently losing credit card customers since the global bank expressed its intention to exit the retail business. The size of the deal is between $2 and $2.5 billion. The second part of the deal will include a service agreement, which will form a larger part of the transaction, under which Citibank will continue to service the customers for a period of 12 to18 months. Mails sent to Axis Bank and Citibank remained unanswered till press time. Axis Bank has nearly 8 million credit cards outstanding.
Typically, integration of this scale takes anywhere between 12 and18 months and, during this period, Citibank will continue to service the credit card customers so that the transfer is seamless without causing any disruption to them.
Citibank announced the sale of its retail businesses across geographies after its new global CEO Jane Fraser indicated that the bank would exit some consumer businesses. Under this global restructuring, India’s credit card business was axed. Other markets where it plans to exit the retail business includes countries like Australia, Malaysia, Thailand, Vietnam, Poland and Philippines.
Citi’s credit card portfolio has been steadily declining since 2020. From 2.73 million cards outstanding in October 2020 it has come down to 2.58 million in October 2021.Axis Bank had 7.73 million cards outstanding in October 2021. Since the start of the pandemic, Citibank has constantly lost the cards market share.
The overall banking system reported net additions of 1.37 million credit cards in December 2021 (+12% month on month), led by healthy traction by HDFC Bank, ICICI Bank, and Axis Bank. This has taken the total credit card base to 68.9 million (14.2% YoY growth – the highest in the past 17 months).
