Axis Bank has completed the acquisition of Citibank’s consumer business in an accelerated time frame of within seven months after receipt of approval from the Competition Commission of India (CCI). The deal has been closed with Axis Bank paying a total purchase consideration of Rs 11,603 crore to Citibank India. Axis Bank welcomes the 30 lakh plus customers of Citibank.
Let’s decode what Axis Bank and Citibank customers gained from this deal.
What was the transaction all about?
The transaction comprises the sale of the consumer businesses of Citibank India, which includes loans, credit cards, wealth management and retail banking operations to Axis Bank. The deal also includes the sale of the consumer business of Citi’s non-banking financial company, Citicorp Finance (India) Limited, comprising asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loans portfolio.
“The bank has gained access to the large, affluent and profitable customer franchise of Citibank, which aligns well with its premiumisation strategy,” says Amitabh Chaudhry, MD & CEO, Axis Bank. He adds, the premium portfolio and business synergies through this deal will help accelerate and add further momentum to the bank’s already robust plans across priority segments.
Axis Bank improves market share in the cards business
Axis Bank’s position in the cards business improved from 11.4 percent to 16.2 percent. It bagged a quality credit card franchise with one of the highest wallet shares in premium cards.
After this acquisition, Axis Bank expects a healthy accretion to the existing card base. Axis Bank sees 19 percent growth in outstanding cards. Combining both the entities, the outstanding cards are 1.12 crore, as per RBI data for April 2022 to January 2023. The combined annual spending per card is set to increase by around 10 percent.
“With the highest number of transactions per card across the industry and digitally engaged customers, the deal would strengthen Axis Bank’s position in the top eight metros,” says Chaudhry. He adds, it also provides the opportunity to adopt global best practices in client servicing and operations through Citi Phone banking.
Axis Bank gets access to highly affluent wealth customers
From today, Axis Bank gains ready access to highly affluent wealth customers, resulting in a 33 percent addition to the overall AUM of Burgundy Private Banking portfolio, further strengthening the existing franchise. With an added AUM of Rs 94,700 crore across Citi products in wealth management and private banking, the current AUM of the bank’s wealth management portfolio stands at Rs 3,78,500 crore, making it the third-largest by combined AUM in the industry. There is a huge potential to cross-sell Axis Bank’s product offerings to Citi’s affluent customer base.
Benefits for Citibank customers
Citi customers will continue to enjoy the same benefits and privileges with no changes in their existing bank account numbers, credit and debit card numbers, cheque books, IFSC and MICR codes. Citi customers will continue to avail all the rewards, privileges and offers on the cards.
The Citi branding and logo will continue on the existing cards. Those will phase out during the transition period in the next 12 to 18 months.
“The credit card portfolio of Axis Bank varies from Citi, so there is no overlapping of features and benefits. Considering this, we don’t have any plans to merge or discontinue any existing credit cards,” says Arjun Chowdhry, Group Executive & Head of Cards, Payments & Wealth, Axis Bank.
Citi customers will continue to be serviced by the same relationship managers and teams for investments and insurance.
The bank said that all the 21 branches of Citi "remain fully equipped to serve the incoming customers. All the services to the incoming customers will continue to function as before", as existing employees move from Citi to Axis.
The retail customers of Citi will now have wider geographical reach with access to 4,900 branches and 16,000 ATMs of Axis Bank.