Axis Bank to acquire Citibank's India consumer business for $1.6 billion

The employees who are part of Citibank's India consumer business, who number up to 3,600, will be transferred to Axis "upon completion of the proposed transaction", the Citigroup said.

Citi India CEO Ashu Khullar said the deal with Axis is a "positive outcome for our staff", adding that the company's priority has been on securing their future.

"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," Khullar added.

In a disclosure to the stock exchanges, Axis Bank said it looks at this acquisition as a "healthy strategic fit", which will provide "access to the large and affluent customer franchise of Citibank having a bouquet of fee-oriented and profitable segments".

The acquired portfolio, the bank said, would increase its credit card customer base by around 31 percent with an additional 2.5 million cards, "which will in turn bolster the cards balance sheet position to be amongst the top three players in the Indian market".

The deal comes almost a year after Citibank had announced that it will exit its consumer franchises in 13 markets, including India, and refocus on its more lucrative institutional and wealth management businesses. Its Indian consumer banking business comprises credit cards, home loans and retail banking.

Axis Bank emerged as the lead buyer after beating rivals like Kotak, another private lender which was reportedly "more aggressive" and had submitted a bid lower than that of Axis, CNBC TV18 reported earlier today. Other factors like job security for current Citigroup employees, competition concerns, and more were also considered before taking the final call, the report added.

Axis Bank MD and CEO Amitabh Chaudhry said the acquisition will add an "enviable retail franchise and a high-quality talent pool as we continue our journey towards becoming a premier financial services brand".

"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," Chaudhry added.

The deal, according to the statement issued by Citigroup, is "expected to close in the first half of calendar year 2023" subject to requisite regulatory approvals.

Citibank India "will ensure that it is done in as seamless a manner as possible" in order to prevent any immediate impact on its customers in the consumer businesses segment, it noted.

"Upon closing, Citi expects the transaction to result in the release of approximately US$800 million of allocated tangible common equity," Citigroup added.

Citi Asia Pacific CEO Peter Babej said the deal with Axis is an "important milestone". As the company moves forward, India will continue to remain a a "key institutional market", he said.

"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 further added.