Three persons with knowledge of the situation told CNBC-TV18 on the condition of anonymity since the agreement has not yet been made public that Axis Bank has emerged as the leading bidder to buy Citibank India’s retail businesses.
According to sources close to the situation, the sale might be all-cash, with a worth of around $2 billion including incentives. According to CNBC-TV18, Axis Bank is expected to sign an exclusivity agreement with Citi for the deal very soon.
The other two competitors in the battle to buy Citi’s India retail division were Kotak Mahindra Bank and IndusInd Bank, but Axis Bank emerged as the frontrunner.
“Kotak Mahindra Bank was widely considered to be the frontrunner, but Axis Bank made a superior offer,” a source close to the situation said. This individual stated that the deal could be worth roughly $2 billion, but did not provide further details.
Axis Bank and Citi India were contacted by CNBC-TV18 for comment on the storey. “We continue to move forward with our process with respect to our India consumer business sale in accordance with our broader strategy refresh,” a Citi India representative said in an emailed answer to the enquiry.
The enquiry has yet to receive a response from Axis Bank. Once the bank’s response is received, the storey will be updated.
CNBC-TV18 was the first to report on the expiration of the bid deadline for Citi’s India retail division and potential suitors on October 22. While IndusInd Bank, Axis Bank, and Kotak Mahindra Bank submitted bids, HDFC Bank did not, contrary to predictions, participate in the process. DBS India also backed out of the race in October, failing to submit a bid.
As of October 2021, Citibank India services 2.5 million retail customers in India, with 1.2 million bank accounts and 2.58 million credit card accounts. Citibank India is one of the country’s largest credit card issuers, accounting for roughly 4% of all retail credit card spending. Axis Bank, in comparison to Citi, is the country’s fourth-largest credit card issuer, with 7.74 million cards outstanding as of October 20201, according to RBI data.
“For Axis, it would be a beneficial acquisition, but the valuation would be a restriction,” CLSA wrote in a note. CLSA projected Citi’s retail book may be worth $2-2.5 billion if retail firms trade at 10x-15x FY23CL PBT, according to the same note.
Since Citi declared its decision to depart the Indian retail market, the bank’s outstanding credit card portfolio has been declining. Its outstanding cards declined from 2.73 million in October 2020 to 2.62 million in April 2021, and subsequently to 2.58 million in October 2021. This is despite a nine-month ban on HDFC Bank issuing new cards during that time, during which time competing banks gained market share.
Citi’s book has been attractive to other Indian banks, despite its smaller market share, because of its premium and corporate salary accounts, as well as substantial spending on its cards.
Citigroup’s global CEO Jane Fraser announced the bank’s pullout from consumer banking in 13 countries, including India, earlier this year while presenting its first-quarter profits for 2021.
Citibank has been operating in India for 119 years, starting in Kolkata in 1902. It presently employs over 4,000 individuals in consumer banking and has 35 offices across the country.