Citigroup agreed to sell its India retail banking business for about 123 billion rupees ($1.6 billion) cash to Axis Bank, as the U.S. lender seeks to consolidate its operations in identified markets.
Citi will sell its consumer banking businesses including credit cards, retail banking, wealth management and consumer loans, it said in a statement on Wednesday. The transaction also includes the sale of the consumer business of Citi’s nonbanking financial company, Citicorp Finance (India) Ltd., comprising the asset-backed financing business.
The deal will bolster Axis Bank’s wealth management business to the third biggest in the country, Amitabh Chaudhry, chief executive of Axis Bank, said at a press conference in Mumbai.
“A transaction of this nature comes in a lifetime, and the price makes sense,” Chaudhry said. “This is perhaps one of the best consumer franchises in the country.”
The cash payout will be the largest among the other eight consumer banking markets Citi has exited in the region so far.
Other key details of the deal:
— Axis will acquire 3 million Citi customers.
— To raise capital as the deal will erode Axis’ common equity ratio by 180 basis points.
— Axis’s wealth management AUM to grow by 1.1 trillion rupees through the addition of Citi’s wealth and private banking business.
As part of the deal, 3,600 Citi employees will move to Axis Bank upon completion of the process by the first half of 2023. Citi expects $800 million of allocated tangible common equity from the deal.
The purchase is part of Axis Bank’s longstanding goal of strengthening its presence in the retail segment.
Read about the other Citi deals:
For Citigroup CEO Jane Fraser, the sale is part of an ongoing strategy to simplify the New York-based bank, do away with its retail banking operations in 13 different countries across Asia and Europe, and focus on high-growth businesses such as wealth management. It will also focus on investment and corporate banking in Asia.
