Axis Bank Completes Citi India's Retail Biz Buy, Pays Rs 11,603 Crore

Axis Bank on Wednesday said it has completed the acquisition of Citibank's retail business in India for a final cash consideration of Rs 11,603 crore. The amount paid is Rs 700 crore less than the amount of Rs 12,325 crore mentioned while announcing the acquisition in March last year because of a decline in deposit base and the reduction in the number of customers consenting to move to Axis Bank post-sale. However, the bank's managing director and chief executive Amitabh Chaudhry made it clear that the Citi business has performed much better than expectations.

"The strategic reasons for the acquisition remain intact and the business remains intact for us," he told reporters. The number of Citi customers who have consented to bank with Axis Bank has declined to 2.4 million from 3 million at the time of announcing the deal, and Chaudhry made it clear that the attrition was expected because the period since June 2021 when Citi first announced its intent to sell off the retail assets in multiple markets including India was really long.

It will be business as usual from here on and the third largest private sector lender domestically does not expect more attrition from here on, Chaudhry said, making it clear that all the rewards and privileges, costing and even the relationship managers will either remain same or get better for the Citi customers. On the employees front, Axis Bank said 3,200 people representing 96 per cent of Citi's overall headcount in the retail vertical have decided to join it. The sale excludes Citi's institutional client businesses in India, and the American lender will continue with the same.

"We remain focused on capturing the India opportunity by growing our already very strong institutional clients' businesses, and supporting our global operations with the country's exceptional talent base through our network of five Citi Solutions Centers," Citi India's chief executive Ashu Khullar said. Chaudhry said the acquisition does not necessitate any new capital requirements and it does not have any plans for a fundraise as the capital adequacy is sufficient even after the payout, and committed that it will focus on growing the business. Both the lenders have reached an extension agreement under which Axis Bank will continue using the Citi brand for up to 18 months from now, by which time the entire integration exercise will be over.

During the integration exercise, Axis Bank expects costs of Rs 1,500 crore to be borne as implementation costs which will be spread over the entire 18 month period, Chaudhry said. The acquisition will help Axis Bank get quality customers which used to be serviced by Citi, Chaudhry said, adding that the bank gets 1.8 million new cardholders having 2.2 million credit cards which will increase its market share by loans outstanding to 16.2 per cent from the earlier 11.4 per cent, adds 21 branches in iconic locations, and expands the wealth management assets under management by Rs 95,000 crore, or a third of the current size of Axis Bank's business.

The deal also gives Axis Bank nearly Rs 40,000 crore in deposits, of which over three-fourths are low cost current and savings account and a net receivables of Rs 27,300 crore across assets like credit cards, mortgage, personal loans, asset backed finance and small business loans. The acquisition amount takes into consideration the Citi business performance till January, and excludes the performance for the month of February, Subrat Mohanty, the group executive for transformation at Axis Bank said, adding that there will be a marginal impact of the same. Axis Bank is the fourth-largest issuer of credit cards with a total base of 8.6 million cards and the deal will help narrow the difference between it and the third-biggest lender, Chaudhry said.

Last year, Axis Bank agreed to purchase Citibank's India Consumer Business from Citibank NA (acting through its branch in India) and the NBFC Consumer Business from Citicorp Finance (India) Limited (CFIL), as going concerns, without values being assigned to individual assets and liabilities to either business. Citi's retail book is nearly Rs 68,000 crore, of which retail loans account for Rs 28,000 crore. With 1.2 million bank accounts, the total India business contributes 1.5 per cent in profit to the lender's global book. Apart from the institutional banking business, it will continue to focus on offshoring or global business support rendered from centres in Mumbai, Pune, Bengaluru, Chennai and Gurugram. Citigroup entered India in 1902 and started the consumer banking business in 1985.

(PTI)