An announcement by Citibank, the consumer division of financial services banking giant Citigroup (NYSE: C) was issued today, March 31st, 2022 that an agreement was reached with Axis Bank in regards to the sale of Citi’s consumer business in India.
After the auction process has been completed, Axis will pay Citi cash considerations of approximately $1.6 billion for the acquisition of this business.
The expected closure of the process should happen in 2023 after regulatory approval. Citi employees, around 3,600 of them will switch over to Axis upon completion of the process.
Once the deal is completed, Citi expects to release $800 million of allocated tangible common equity. Citi also announced that it will be divesting its consumer banking franchise across 13 markets and it is expected that around $7 billion of allocated tangible common equity will be released over time.
A strategic refresh
The announcement to exit consumer franchise businesses across markets demonstrates Citi’s sense of urgency to execute its refreshed business strategy. The focus for Citi will now shift towards institutional clients, with the bank now shifting its energy to serving those customers exclusively.
On the other hand, Axis will benefit from the rich heritage of the consumer business network that Citi created when it first came to India in 1902.
With a rich history in India, Citi handles 8% of India’s trade flows and 5% of the country’s electronic payments. Additionally, support was offered to foreign investors to get access to Indian markets managing a third of their activities in India.
With the acquisition, Axis’s balance sheet is expected to grow by 57%, furthermore Citi credit card business will launch Axis now into the top three providers of these services in India.
All in all, this merger and acquisition (M&A) is a good fit for Axis’s key pillars of building a premium base of customers and increasing granularity.
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