In this article, we will be discussing about the deal of Axis Bank acquiring Citi Bank Retail Business of India for the total amount of Rs. 12,325 Cr. How this deal is beneficial for Axis Bank and how will be the synergies set up between both the entity, and whether it is beneficial for shareholders or not, let’s discuss this in detail, in this article as we move ahead.
Axis Bank-Citi India deal:
The deal of Axis Bank acquiring Citi Bank India’s consumer business is of the value of around Rs. 12,325 Cr.
With this deal, Axis Bank will acquire the Credit Cards, Wealth Management, Retail Banking, and Consumer Loan Business of Citi Bank Indian Retail/consumer business.
Talking about the Credit Card business, the industry itself is quite lucrative and here Citi Bank’s Credit Card is having 40% higher spending than the industry average.
In the wealth management business of Citi Bank, there are a high number of High Net Worth Individuals (HNIs) and Ultra HNIs as well. It is having Asset Under Management (AUM) of Rs. 1.1 Lakh Cr. in its wealth management business. This wealth management business is highly lucrative as 1% fees can be received by the bank which will add more value to Axis Bank
Citi Bank India is having consumer loan business of Rs. 18,500 Cr. which is also an attractive figure as well.
Citi Bank India is currently having 3,600 employees which will now become employees of Axis Bank.
This acquisition deal will take around 9-12 months for regulatory approval and another 18 months might be needed for full integration of the operations.
Axis Bank will pay another Rs. 1,500 Cr. to Citi Bank for servicing the consumers during the transition period.
Citi Bank India is having a total customer base of around 30 Lakhs which will now be added to the customer base of Axis Bank.
Citi Bank India has had 25 Lakhs Credit Card customers.
Further in terms of the Retail Banking business Citi Bank India is having total deposits of Rs. 50,000 Cr. at a low-cost CASA of 81%. Then Axis Bank will also gain 10 Lakh customers of 1,600 Corporates.
Challenges for Axis Bank:
With this deal happening, Axis Bank might face a big challenge of Attrition of employees as well as customers.
What Should Investors Do?
The deal of Axis Bank to acquire the consumer business of Citi Bank India is a positive deal for Axis Bank as it will be acquiring quite a lucrative and high-value business which might add a good figure to the topline and bottom line of the bank. The only challenges Axis Bank might face is employee or customer attrition which the bank is planning to settle off via an extra payment of Rs. 1,500 Cr. for the smooth transitions.
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