Axis Bank to acquire Citi for Rs 12,325 crore

Private sector lender Axis Bank on Wednesday said its Board has approved acquisition of Citibank’s consumer businesses in India for a cash consideration of around Rs 12,325 crore. The transaction comprises the sale of the consumer businesses of Citibank India, which includes credit cards, retail banking, wealth management and consumer loans, the lender said in a statement issued here. “The bank will pay a consideration of Rs 12,325 crore to Citibank for the acquisition,” it said. The deal also includes the sale of the consumer business of Citi’s non-banking financial company, Citicorp Finance (India), comprising the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio. Earlier in the day, Citi, in a separate statement has said that it has reached an agreement with Axis Bank for the sale of its consumer businesses in India for a cash consideration of USD 1.6 billion. It said that Axis was selected by Citi following an extensive and competitive auction process. The transaction, however, excludes Citi’s institutional client businesses in India, the company said adding that it remains committed and focused on serving institutional clients in India and globally. “Axis Bank looks at this acquisition as a healthy strategic fit. It will gain access to the large and affluent customer franchise of Citibank having a bouquet of fee-oriented and profitable segments, that include quality credit card portfolio, affluent wealth management clientele, meaningful deposits with 81 per cent being CASA, along with a strong consumer lending portfolio,” Axis Bank said in the statement. Post the acquisition, Axis Bank will have 28.5 million Savings Accounts, over 2.3 lakh Burgundy customers and 10.6 million cards. The acquired portfolio would increase Axis Bank’s credit card customer base by 31 per cent 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 per cent to the Bank’s deposit base, with 12 per cent increase in CASA and 4 per cent increase in advances,” it said. The transaction will also include approximately 3,600 Citi employees supporting the consumer businesses in India, who will transfer to Axis upon completion of the proposed transaction. “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,” Axis Bank said. 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 transaction is expected to close in the first half of calendar year 2023 subject to requisite regulatory approvals. “This announcement is only the start of a process, and while there will be a transition, Citi will ensure that it is done in as seamless a manner as possible, with due notice. There will be no immediate impact on the services to the customers of Citi’s consumer businesses in India,” Citi had said. Upon closing, Citi expects the transaction to result in the release of approximately USD 800 million of allocated tangible common equity. As was previously announced, Citi’s global exit from its consumer banking franchises in 13 markets across Asia and EMEA is expected to release approximately USD 7 billion of allocated tangible common equity over time, it added. Axis Bank and Citibank together will ensure continuity of superior customer service levels, even post-closing of transaction, across all customer channels. Speaking on the occasion, Amitabh Chaudhry, MD and 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.” He further said 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. Citi India CEO, Ashu Khullar said, “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.” He noted that 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. In its statement, Peter Babej, Citi Asia Pacific CEO, said the deal represents an important milestone for its franchise and offers an excellent opportunity to our consumer banking colleagues in India. “As we move forward with this transaction, India remains a key institutional market for Citi. In line with our broader strategic repositioning, we will continue to support our institutional clients in this core market and across APAC, delivering the full power of our global network to enable their growth,” Babej added. Citi’s Banking, Capital Markets and Advisory Group acted as exclusive financial advisor to Citi in respect of the transaction, while on behalf of Axis Bank, Axis Capital and Credit Suisse acted as Financial Advisors. Khaitan & Co acted as Legal Advisor. In addition, Axis Bank was supported by PricewaterhouseCoopers and Boston Consulting Group.

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