Axis Bank will acquire Citi’s consumer businesses in India for a cash consideration of approximately $1.6 billion, Citi announced in a press release.
The transaction comprises the sale of the consumer banking businesses of Citibank India, which includes credit cards, retail banking, wealth management and consumer loans, the statement said.
“Axis was selected by Citi following an extensive and competitive auction process,” the global banking behemoth said.
It added that the transaction also includes the sale of the consumer business of Citi’s non-banking financial company (NBFC) 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.
However, it excludes Citi’s institutional client businesses in India. “Citi remains committed and focused on serving institutional clients in India and globally,” the statement said.
Following the completion of the transaction, approximately 3,600 Citi employees working in the consumer businesses in India will transfer to Axis Bank. Citigroup said that the transaction is expected to close in the first half of calendar year 2023 subject to requisite regulatory approvals.
“This announcement is only the start of a process, and while there will be a transition, Citi will ensure that it is done in as seamless a manner as possible, with due notice,” the statement said adding that there will be no immediate impact on the services to Citi’s consumer business customers.
Upon closing, Citi expects the transaction to result in the release of around $800 million of allocated tangible common equity. As was previously announced, Citi’s global exit from its consumer banking franchises in 13 markets across Asia and EMEA is expected to release approximately $7 billion of allocated tangible common equity over time.
Citi’s Banking, Capital Markets and Advisory Group is acting as exclusive financial advisor to Citi in respect of the transaction.
“Our announced transaction with Axis, a leader in Indian financial services, represents an important milestone for our franchise and offers an excellent opportunity to our consumer banking colleagues in India. As we move forward with this transaction, India remains a key institutional market for Citi. 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,” said Peter Babej, Citi Asia Pacific CEO.
Citi has been present in India since 1902 and has served large and mid-sized corporates, financial institutions and multinational companies operating in the country. It serves over 2000 international corporations in India and 300+ large domestic companies and financial institutions. It helps corporations raise capital (debt and equity) and provides financing solutions, besides working with them on risk management and transaction banking.
Citi is actively engaged in various government initiatives, including working with our clients to channelise foreign capital through FDI investments under the PLI (Performance Linked Incentive) scheme of the Government of India, as well as FII / FPI flows into the country.
As a leading investment bank in the country, in 2021 alone, Citi has helped raise over $29 billion of capital across over 40 equity and debt transactions and provided strategic M&A advisory on seven announced transactions, amounting to over $5 billion. It also handles 8 per cent of India’s trade flows and 5 per cent of the country’s electronic payments flows. Citi supports foreign portfolio investors to get access to Indian markets – managing about a third of their activities in India as a custodian.