Citibank has agreed to sell its Indian retail banking business including savings accounts, credit cards, and wealth management to Axis Bank, a private sector banking major for $1.6bn. The deal will be executed in cash. Besides Axis Bank will also pay Citi an integration cost of INR 15bn ($198mn) for servicing the business till the merger goes to completion. Axis Bank will require another INR 35bn ($461.1mn) as capital and for regulatory requirements for taking over Citi’s INR 270bn ($3.6bn) loan book. Post completion of the deal Axis bank will have a total of 28mn savings bank accounts and 10mn credit cards. Its deposit and loan books will increase 7% and 4% respectively. Capital adequacy ratio is set to reduce by 180bps to 13%. Axis Bank will also absorb Citi’s 3600 employees. The deal is expected to get regulatory approval and close in 9-12 months. Citibank however will continue its Indian corporate and wholesale banking business. It was the first to introduce credit cards in India in 1987, but its market share in the last 10 years decreased to 4% from 13% as per Macquarie. Citi’s move to exit India’s retail business is as per their plan to exit consumer business in 13 countries.

Axis bank’s dollar bonds were lower – its 4.1% Perps were down 0.2 points to 93.53 and yielding 5.78%.

Citigroup’s dollar bonds were slightly higher – its 4% Perp was up 0.65 points to 95.75 and yielding 5.28%.

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