Citi India on Wednesday, March 30, declared that private lender Axis Bank will acquire the group’s retail assets in India for an amount of $1.6 billion. The Axis-Citi deal was being anticipated since the American lending giant had announced its exit from the country in April last year. Under the agreement between Axis Bank and Citi India, the former will acquire the foreign company’s consumer business in the country through milestone-linked payments. Citi India’s announcement comes after media had reported earlier in the day regarding the development.
Under the agreement, Citigroup will transfer its 3,600 employees to Axis Bank “upon completion of the proposed transaction", the US firm said. According to a statement released by Citi, the Citigroup-Axis Bank deal closure period has been fixed between January-June 2023. The statement said that the deal is “expected to close in the first half of calendar year 2023" but this is subject to requisite regulatory approvals. Citigroup’s India retail operation sale excludes institutional operations.
In a press conference later in the day, Axis Bank CEO and MD Amitabh Chaudhry said there will be no milestone payments in deal, and a cash deal of Rs 12,325 crore will be payable only once entire business gets transferred from Citi Bank. Chaudhry also said that Axis Bank is well funded on balance sheet to complete the deal, whose approval might take 9-12 months. The integration of Axis Bank and Citi will take 12 to 18 months, he added.
The transaction will include the sale of credit cards, wealth management, retail customer accounts and consumer loans, Citigroup has said. “The transaction also includes the sale of the consumer business of Citi’s non-banking financial company, 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," it added.
The Citigroup in its statement added that the deal excludes the company’s client business in India. “Upon closing, Citi expects the transaction to result in the release of approximately US$800 million of allocated tangible common equity," it said.
“Citi remains committed and focused on serving institutional clients in India and globally," it said further, while also stressing that the company “will ensure that it is done in as seamless a manner as possible".
Speaking about the deal, Citi India CEO Ashu Khullar said that the company’s priority was the security of their employees, and added that the deal with Axis Bank was a “positive outcome for our staff".
“We continue to remain committed to contributing to India’s growth and development as we deepen our presence through our institutional businesses and our community initiatives. Citi will also continue to harness India’s rich talent pool in the areas of technology, operations, analytics, finance and allied functional areas through its network of Citi solution centers that are located in five cities in India and support our global businesses," said Khullar.
Citi Asia Pacific CEO Peter Babej described the deal with Axis Bank as an “important milestone", adding that India will remain a “key institutional market" as the US banking giant moves forward
“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," he added.
The deal comes almost a year after the American banking major had announced its plan to exit from the consumer banking business in as many as 13 countries including India. The banking firm said it will focus on four it wealth centres including Singapore, Hong Kong, the United Arab Emirates and London.