Axis Bank completes Citibank India deal
2 min read . Updated: 02 Mar 2023, 01:38 AM IST
PremiumThe deal comprises sale of the credit cards vertical, retail banking, wealth management and consumer loans
Mumbai: Axis Bank on Wednesday said it has completed the acquisition of Citibank India’s consumer banking business for ₹11,603 crore marginally lower than what was announced in March 2022. This is due to the attrition seen among Citibank customers during the transfer of operations and jobs to Axis Bank.
The transaction comprises the sale of credit cards vertical, retail banking, wealth management and consumer loans. With this, Axis Bank’s market share in the credit cards business will jump to 16.2% from 11.4%, with an addition of 1.8 million credit cards.
Axis Bank has 9.58 million credit cards and clocked about 19.5 million transactions (viaPoS) for a value of ₹6,161 crore and 12.9 million online transactions worth ₹5,602 crore, according to RBI data for January. It will gain access to six Citi offices, 21 branches and 499 ATMs across 18 cities.
Amitabh Chaudhary, managing director and chief executive officer of Axis Bank, said 96% or 3,200 of Citi employees have joined the bank. The core capital buffer will go down by 1.70% from 15.55% in December. The entire integration will happen over the next 18 months, Chaudhry said, adding that it will take a hit of ₹1,500 crore as implementation costs, which will be amortised as the costs are incurred. Chaudhry said bank account details, cheque books, product benefits and privileges, debit card details will remain the same for the Citi customers, who are migrating to Axis Bank. Axis Bank has aggregate deposits of ₹8,881 billion, and a high proportion of the current, savings account (CASA) is at 77%
Besides boosting the credit card business, the deal will help Axis expand the wealth management business, with the combined AUM expected to increase by ₹94,700 crore.
It will also help cross sell Axis Bank’s products to Citi’s affluent customer base.
Asutosh Mishra, analyst at Ashika Stock Broking, said the bank will take a one time hit in profit and loss P&L in Q4 to write off of goodwill, at around ₹1,800 crore. “The synergy benefit will accrue over next two years. The acquired business has been an ROE accretive with the ROE of acquired business at 21.7% compared to Axis Bank’s 13-14%," he added.
In April 2021, the Citigroup had announced plans to exit its consumer businesses in 13 markets, including India. Citibank had set foot in India 119 years ago, starting operations in Calcutta, part of British India. A century later, it had built a business covering 2.9 million retail customers, 1.2 million bank accounts and 2.4 million credit card account holders.