Citibank signed a deal with Axis Bank to sell its entire consumer bank business including credit cards, savings accounts,retail consumer accounts,consumer loans and wealth management for $1.6 billion (Rs 12,235 crore). However the deal excludes Citibank’s institutional client businesses in India.
- This is one of the biggest deals in the banking space since the acquisition of ING Vysya Bank by Kotak Mahindra Bank in 2014 for Rs 15,000 crore.
- The transaction 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.
Key points:
i.Axis Bank will offer 3,600 employees of Citi’s consumer banking business a remuneration that is at par or higher than their current packages.
- The deal will enable the Axis Bank to gain more capital and customer support across India.
ii.Besides the sale price, Rs 3,450-crore capital will be required for the loan book of over Rs 27,400 crore, which will get transferred, and also a payout of up to Rs 1,500 crore in integration cost.
- The integration cost will be paid by Axis to Citi for servicing the business till the merger gets complete.
iii.After the acquisition,the combined CASA (Current & Savings account) ratio on a pro-forma basis will improve by 200 basis points to 47 per cent and it will also be LCR (liquidity coverage ratio)-accretive.
iv.Post Acquisition Axis Bank’s deposit base will increase by 7%, CASA by 12% and Loan by 4%.Axis Bank will have around 28.5 million savings accounts and close to 11 million credit cards.Axis Bank will get Deposits of Rs.50200 crore;81% are low cost current & savings account deposits. Rs.1.11 Trillion Assets Under Management(AUM) from Citi Wealth and Private Banking.
About Axis Bank:
MD & CEO- Amitabh Chaudhry
Headquarters- Mumbai, Maharashtra
Establishment- 1993 (Commenced Operation-1994)
Tagline – Badhti Ka Naam Zindagi
