Axis Bank to acquire Citibank's consumer businesses in India

Axis Bank and Citibank on Wednesday have announced that their respective Boards of Directors have approved the acquisition of Citibank’s consumer businesses in India by Axis Bank. The acquisition is subject to customary closing conditions, including receipt of regulatory approvals.

The Bank will pay a consideration up to Rs12,325 crore to Citibank for the acquisition. The Bank’s large loan book would be complemented by Citibank’s affluent customer segment, creating product and branch footprint synergies.

Citibank’s customers to get benefitted from Axis Bank’s augmented scale, larger geographical reach and width of products and offerings.

The transaction comprises the sale of the consumer businesses of Citibank India, which includes credit cards, retail banking, wealth management and consumer loans. The deal also includes the sale of the consumer business of Citi’s non-banking financial company, Citicorp Finance (India) Limited, comprising the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio.

Post the acquisition, Axis Bank will have ~ 28.5 mn Savings Accounts, 2.3 lakh+ Burgundy customers and 10.6 mn Cards.

The Bank has made large investments in people, processes and technology over the past few years. With all the required capabilities in place, it expects successful integration across all key parameters including employees, customers, product offerings and technology in a value accretive manner. Additionally, the deal offers strategic advantages to the Bank such as premiumization of its overall customer portfolio, increased opportunities to cross-sell its products and accelerated digital transformation.

The acquired portfolio would increase Axis Bank’s credit card customer base by ~31% with an additional 2.5 million cards, which will in turn bolster the Cards balance sheet position to be amongst the top 3 players in the Indian market. Moreover, the wealth and private banking portfolio will add great value to the Axis Burgundy business, further accelerating its growth ambitions in that segment. On an overall basis, the proposed transaction will add ~7% to the Bank’s deposit base (with ~12% increase in CASA) and ~4% increase in advances.

Further, Citibank’s customers will specifically benefit from Axis Bank’s wider geographical reach and comprehensive service offerings, along with One Axis capabilities that extend across all its subsidiaries.

Amitabh Chaudhry, MD&CEO, Axis Bank said, “We are delighted with the addition of an enviable retail franchise and a high-quality talent pool as we continue our journey towards becoming a premier financial services brand, in line with our GPS strategy framework. This is a significant milestone in Axis’ journey of growth and leadership and will bring in great value for all stakeholders. The amplified scale and width of offerings, the diversified portfolio of products and global best practices will enhance customer experience, while greater synergies both on revenue and cost side will augment value for the new franchise.”

Ashu Khullar, Citi India, CEO said, “We are extremely pleased with this outcome for our consumer colleagues and clients. Axis Bank is committed to building its consumer banking business in India and is backed by a strong market presence. We believe Axis Bank will provide our employees an excellent environment to build their careers and shall meet all the financial needs of our consumer clients. We continue to remain committed to contributing to India’s growth and development as we deepen our presence through our institutional businesses and our community initiatives. Citi will also continue to harness India’s rich talent pool in the areas of Technology, Operations, Analytics, Finance and allied functional areas through its network of Citi Solution Centers that are located in five cities in India and support our global businesses.”

Axis Capital and Credit Suisse acted as Financial Advisors to Axis Bank for the transaction, and Khaitan & Co acted as Legal Advisor. In addition, the Bank was supported by PricewaterhouseCoopers and Boston Consulting Group.