Citi India retail business deal to fetch good returns for Axis Bank, says Macquarie's Ganapathy

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The acquisition of Citibank’s retail business in India by Axis Bank for $1.6 billion has been termed a “good deal, at a good price” by Macquarie Securities analyst Suresh Ganapathy.

Citibank, which had announced its intent to sell its domestic consumer business last year, on March 30, said that it will sell the business to the Indian private sector lender after a drawn-out bidding process.

As part of the deal, Axis Bank will get Citi’s lucrative credit cards customers and its about 3,600 employees. However, Citi will continue to serve its institutional clients in the country. Axis Bank said that the deal could take 9-12 months to complete depending on regulatory approvals.

Ganapathy, who has a 'neutral' rating and a price target of Rs 790 on Axis Bank, said the deal should be accretive for the private lender’s return on investment as well as margin.