Citibank customers, who become part of Axis, will get access to a much wider network of branches across India. (File Photo)
The Competition Commission of India last week approved Axis Bank’s acquisition of the consumer banking operations of Citibank, NA and Citicorp Finance (India) Ltd. The deal thus crossed another hurdle and moved a step closer to fruition after Axis Bank had announced its plan to acquire Citibank’s consumer businesses for Rs 12,325 crore in March.
What is the Axis Bank-Citibank deal about?
The acquisition comprises Citi’s credit cards, unsecured and secured lending portfolios, wealth management, private banking and retail deposit businesses. The deal also includes the sale of Citicorp Finance (India) Limited. Axis Bank would acquire around 1.2 million retail customers of Citibank India, including 40,000 wealth and private banking clients, which would help it enhance its presence in the highly competitive urban retail market. Its cards balance sheet is set to grow by 57% with an additional 2.5 million Citibank cards, making it one of the top three cards businesses in the country.
“Credit cards are the most sticky product of a bank and if a bank has a good presence in that segment, growth is bound to happen as one can both raise CASA from that customer and sell lending and other products to that customer,” the CIO of a top mutual fund said.
As of June 2021, Citi had 2.5 million cards and a book size of Rs 8,900 crore. Also, monthly card spends are among the highest for Citi cards.
How will it impact the customer?
Citibank customers, who become part of Axis, will get access to a much wider network of branches across India and thereby better service, while Axis customers will have access to high-quality private banking and wealth management services through the talent pool of Citibank.
And how will it benefit investors in Axis Bank?
With access to high-value clientele, wealth management business, and a sizeable high-quality credit card portfolio, Axis Bank may witness not just a growth in its retail operations but also a rise in revenue per customer on account of the enhanced services it can offer. Analysts say the acquisition will enhance Axis’s presence in the major cities.
“Most banks are looking to increase their unsecured portfolio as it provides higher yield. Through this deal, Axis Bank is getting what other banks are chasing and this will help improve its spread. Also it will provide cross selling opportunities as they will have a database of good quality customers and that will help in profitability and share price rise of the bank in the medium to long term,” the research head of a leading brokerage firm.
However, it is not without challenges, as all Citibank customers may not stay back. Officials of some private banks say several high-net-worth individual (HNI) customers of Citibank have been approaching them.
Analysts, however, say the Axis Bank management would have accounted for this, and so it is not a big concern. “Axis Bank will get to increase its retail base of high value customers, increase its unsecured portfolio and a bigger customer base to cross-sell lending and other products,” said the analyst.
FAQs
How will it impact the customer? Citibank customers, who become part of Axis, will get access to a much wider network of branches across India and thereby better service, while Axis customers will have access to high-quality private banking and wealth management services through the talent pool of Citibank.
What the Axis deal means for Citi customers? ›
Erstwhile Citibank customers who have consented to transition, can access any of Axis Bank's ATMs. This service is not applicable to overseas Citi ATMs. However, customers will be able to use their existing Citibank Debit Cards to withdraw cash at any of the ATMs outside India, subject to levy of applicable charges.
What will happen to Citibank credit card holders in India? ›
Branches & ATMs Bank Account & Debit Card Demat & Investments Insurance Credit Cards Pursuant to this sale, Citi's consumer business in India will be duly transferred to Axis Bank and will henceforth be part of Axis Bank business and your accounts will continue with existing product features, services and charges.
What happens to Citibank customers? ›
Yes, your Citi account will remain the same after the acquisition by Axis Bank. "You can continue using your Citi account without any changes in account number, IFSC / MICR codes, debit card, chequebook, fees, and charges and continue to enjoy the many benefits of your account," Citibank said.
Why Axis Bank acquires Citibank? ›
The acquisition is a healthy strategic fit in line with Axis Bank's GPS (Growth, Profitability & Sustainability) strategy and its focus on premium segment growth. The Bank has gained access to the large, affluent and profitable customer franchise of Citibank, which aligns well with its Premiumization strategy.
What is the deal between Axis Bank and Citibank? ›
Axis Bank declared the acquisition on Wednesday, March 30, 2022. A year later, the consideration has also exchanged hands. The bank has paid ₹11,603 crore, around ₹722 crore lower than the original consideration.
What is the deal between Citibank India and Axis? ›
Axis Bank announced on 1 March the completion of the acquisition of Citi India's consumer banking business for ₹11,603 crore . The bank said in a statement on Thursday that it made prudent accounting choices in relation to one-time items of ₹12,490 crore.
What will happen to Citibank credit card holders? ›
There is no impact to your account, Credit Cards, Personal Loans or any other Citi products. You can continue to use Citibank Online and mobile banking, CitiPhones and all other channels - we are keen to serve you.
What will happen to Citibank credit card users? ›
The huge transition will happen in the middle of 2023 when it completes the integration. At that point, UnionBank will start migrating Citi accounts and services to UnionBank's systems and platforms, while credit cards and debit cards will also be replaced with new UnionBank cards.
Can Citibank customers go to Axis Bank? ›
Yes, post transfer of your existing Citi relationship to Axis Bank, you will continue to avail same set of services that are currently available through Citi.
Citi India has transferred ownership of its consumer banking business to Axis Bank (registration number L65110GJ1993PLC020769). Consumer banking customers can continue to use all existing Citi products and/or services, branches, ATMs, internet banking and Citi Mobile® App as usual.
What will happen to Citibank account in India? ›
As of March 1, 2023, Citibank's consumer business in India will be transferred to Axis Bank. Axis Bank Ltd, an Indian private lender, has completed a deal to buy Citigroup Inc's local consumer and non-banking finance businesses, effectively exiting the US lender's credit card and retail businesses in the country.
Is my money safe in Citibank? ›
The funds in your Deposit Accounts at each Program Bank are eligible for insurance by the FDIC up to $250,000 (including principal and accrued interest) per depositor in each insurable capacity (e.g., individual, joint account, IRA, etc.).
Is Axis Bank safe? ›
Axis Bank is steadfast about protecting your finances and privacy and preserving your trust. We also request you to do your part in safeguarding your information. Whenever you're using internet banking services, keep certain precautions for online banking in mind for a secure banking experience.
How much did Axis Bank Citibank merger cost? ›
Axis Bank has completed acquisition of Citi's India consumer/ wealth business from Wednesday, 1 March, 2023 for ₹11,603 crore, marginally lower than what was announced in March 2022. The deal will be funded through internal accruals, and the CEO reiterated that there are no plans to raise capital in the near future.
How much did Axis pay for Citibank? ›
Axis Bank has announced the closure of its acquisition of Citibank's consumer business for a total purchase consideration ) of ₹11,603 crore ($1.41 billion). This is lower than the ₹12,325 crore ($1.6 billion) when the deal was announced in March 2022.
What is the value of Citi Axis deal? ›
Indeed, the lender's initiative to ramp up its wealth management platform is paying off. A big part of that strategy—the acquisition of Citibank India's retail business, branches and all— for a cash consideration of Rupees 12,300 crore, is shaping up well. It's a good business to own.
What will happen to Citibank credit cards? ›
All currently existing Citi-branded cards will remain in use even after the system migration, but their names will change to align more with a Bigger and Stronger UnionBank brand.
What is the Max and Axis deal? ›
Axis Bank along with its entities acquired a 12.99 per cent stake in Max Life in 2021, and through this new investment, they will own 19.02 per cent in Max Life.
Citibank customers, who become part of Axis, will get access to a much wider network of branches across India. (File Photo)
