Kotak, Federal in talks to buy Deutsche Bank’s India retail, wealth book: Report

Foreign banks in India continue to face challenges competing with larger domestic lenders due to higher operational costs and tighter pricing.

Kotak Mahindra Bank and Federal Bank are evaluating a potential acquisition of Deutsche Bank's retail and wealth management operations in India, as reported by The Economic Times. This marks the German lender's second attempt in eight years to exit this business segment in the country.

The Economic Times noted that both Indian banks have reviewed the portfolio and are actively negotiating valuations. The assets on offer include personal loans and a portion of mortgage accounts. While the exact mix has not been independently verified, The Economic Times reported that Deutsche Bank's wealth management unit in India manages assets of around Rs 25,000 crore. The bank's retail segmental revenue for FY25 stood at Rs 2,455 crore, compared with Rs 2,362 crore in the previous financial year.

Disclosures cited by The Economic Times show that Deutsche Bank had Rs 25,038 crore in retail banking assets as of March 2025. The proposed sale forms part of a larger global restructuring under CEO Christian Sewing aimed at boosting profitability. Individuals familiar with the discussions told The Economic Times that both Kotak and Federal view this as an opportunity to expand their loan books and gain access to Deutsche Bank's wealth clientele.

Spokespersons for Kotak Mahindra Bank and Federal Bank did not respond to queries from The Economic Times, and Deutsche Bank also declined to comment.

As highlighted by The Economic Times, foreign banks in India continue to face challenges competing with larger domestic lenders due to higher operational costs and tighter pricing. Citibank's 2022 sale of its retail and credit card business to Axis Bank in a transaction exceeding USD 1 billion is one recent example. Earlier this year, Kotak Mahindra Bank purchased a Rs 3,330-crore personal loan portfolio from Standard Chartered. Deutsche Bank had previously sold its credit card business to IndusInd Bank in 2011.

In Frankfurt, CEO Sewing recently set out new operational targets through 2028, The Economic Times reported. The bank is aiming for a return on tangible equity above 13% by 2028, compared with a current target of more than 10%. Deutsche Bank recorded a 10.9% return on tangible equity in the third quarter of 2025. Revenue is projected to rise from around EUR 32 billion in 2025 to roughly EUR 37 billion by 2028, while the cost-to-income ratio is expected to fall below 60% from the present target of under 65%. The ratio stood at 63% in the third quarter of 2025.

The Economic Times reported that Deutsche Bank's India wealth management unit includes debt products tied to the lender's corporate franchise, along with long-standing affluent client accounts-both of which are considered attractive for Kotak or Federal. The German bank explored a sale of its retail and wealth businesses in India in 2017 but ultimately withdrew. India remains its only non-European market with a retail franchise, making it an outlier the bank now seeks to correct. While Deutsche Bank operates 17 branches in India, many may be shut once an exit is formalised, The Economic Times noted.

Sources cited by The Economic Times said this sale attempt appears more determined than previous efforts, although Indian buyers are known for driving hard bargains, which could influence the outcome. No concrete timeline has emerged, and the publication reported that the process will likely be prolonged due to approvals needed from both regional and global headquarters.

Financial data shared in The Economic Times show Deutsche Bank's profit in India rising 55% in FY25 to Rs 3,070 crore, supported by strong interest and non-interest income growth. Total income increased 11% to Rs 12,415 crore, while operating expenses remained muted. The lender's Indian franchise has long been anchored in investment banking, corporate and transaction banking, treasury and derivatives, and private wealth. As The Economic Times highlighted, the bank has supported expansion in India with repeated capital infusions-including Rs 3,946 crore between 2018 and 2021 and Rs 5,113 crore in 2024, as noted in a Crisil report.