Axis Bank Concludes Citi Retail Business Acquisition At Rs 11,603 Crore
Axis Bank acquires Citi's retail business for Rs 722 crore lower than what was previously announced
Private lender Axis Bank Ltd. closed the acquisition of Citibank India's retail business, including the consumer business under Citicorp Finance India Ltd., for Rs 11,603 crore on March 1. The value is subject to adjustment and changes in the retail businesses over the last month.
"Accordingly, the businesses of CBNA and CFIL stand transferred to Axis Bank, and the bank becomes the owner of Citibank’s India Consumer Business and NBFC Consumer Business effective from 00.00.01 hours on March 1, subject to and in accordance with the requirements and terms of the agreed contractual documentation and settlement of consideration," Axis Bank said in a statement to exchanges early on March 1.
The domestic lender had first announced the acquisition of Citi's retail businesses on March 30, 2022, for Rs 12,325 crore. At the time, Axis Bank said that the acquisition included 3,600 Citi employees who support the consumer banking business and would be transferred to the local bank.
As part of the deal, Axis Bank will receive:
A credit card portfolio of 1.8 million cardholders and 2.2 million cards.
Aggregate retail deposits worth Rs 39,900 crore.
Access to assets under management worth Rs 94,700 crore worth balances across Citi products including Citigold Private, Citigold, Citi Priority and Citi Private Bank customers.
Aggregate ending net receivables worth Rs 27,300 crore across credit cards, mortgage, personal and ready credit loans, asset backed finance, small business loans.
About 3,200 employees who will join Axis Bank on Wednesday.
According to Amitabh Chaturvedi, managing director and chief executive officer at Axis Bank, the transaction was concluded within seven months of receiving approvals from the Competition Commission of India. The bank expect to implement the acquisition over the next 18 months.
About 80% of Citi's India customers and 96% of the bank's retail banking staff agreed to move to Axis Bank under the transaction. Citi's customers as well as employees will continue to receive similar or better terms with Axis Bank.
The acquisition will also boost A-xis Bank's wealth management business, which would receive a boost from Citi's pool of high-net-worth customers and its consumer banking staff.
While the domestic bank expects some amount of attrition in the book, as is natural in any bank, it expects it will retain most of Citi's business that it has now acquired.
"The Citi retail business pre-Covid was quite profitable and provides Axis with an affluent base of assets and more importantly Rs 500 billion (Rs 50,000 crore) of retail liabilities," CLSA said in a note on Wednesday. "At current valuations, Axis Bank trades at less than 1.6x/1.35x FY24/FY25 book (including Citi). Citi (pre-Covid profits) would be 3-4% equivalent of the consolidated business."
According to Chaudhry, the transaction will result in a hit of 170 basis points to Axis Bank's capital adequacy ratio. It will spend about Rs 1,500 crore as part of the implementation process.