Mumbai: Axis Bank has turned out to be a pioneer in the race to obtain retail assets and Citi Indian credit cards.
Axis Bank has emerged after a private sector rival does not approve the assessment sought by Citi for its business.
Citi has announced the plan to get out of the consumer banking business in India.
The bank headquartered by the US wants to complete the buyer before the end of December.
Bankers estimate that business will be worth around $ 2 billion.
However, some private lenders have placed an assessment at a much lower level.
One condition for sales is that retail business employees will be absorbed by the buyer.
Given the higher level of compensation among multinational companies, this makes it a breakdown for public sector lenders such as SBI, which has the second largest card business through its subsidiaries.
When contacted, the Citi spokesman said in a statement, “we continue to move forward with our process with respect to the sale of our Indian consumer business according to our broader strategic refresher.” Axis Bank does not respond to comment requests.
Previously, the bank box was seen as a danger for several reasons.
The bank still fosters the franchise of retail obligations and is behind all major private rivals in the card business.
It also managed to integrate other multinational businesses in India.
However, the box has retreated over the assessment problem.
The previous AXIS bank has obtained a digital freecharge and recent payment company, buying shares in Max life insurance.
Citi has around 27 extraordinary Lakh credit cards and around 16 lakh savings accounts.
This is the sixth largest credit card publisher.
Axis Bank, with a 77 lakh card, is the fourth largest publisher after ICICI Bank (1.2 crore cards).
While the acquisition will not move the Axis Bank to rise (see Charts), it will increase the average card expenditure because of the large premium portfolio owned by Citi.
One reason why the top banks alert to buy a multinational bank portfolio is that it has been very efficient in controlling costs and extracting the value of its portfolio.
“Usually, when the bank obtains a portfolio, there is a scope to increase income either through the reduction in funding costs or because of higher yields in progress.
Citi funding costs are the lowest level with a savings rate of 2.5%.
Furthermore, they offer several housing loans Most competitive to high-end individuals (HNI).
They will also sell all possible products, “said a banker.
In the case of HDFC banks, lenders say that there are a large number of customers who have cards from both banks.
This will make it a less attractive choice for the largest personal lender in the country.
Citi’s decision to announce the exit first and then look for buyers also made it difficult for Indian operations.
This encourages many key employees to start looking out and has changed some high-value customers alert.
“The ability of acquired banks to maintain HNI customers will depend on their success in maintaining high-performance relationship managers,” said a banker.
Citibank card portfolio remains very sticky even though there is an announcement of sales.
Although the number of outstanding credit cards fell to 25.8 lakh in October from 26.2 lakh in April this year, a decrease is more related to the prohibition of MasterCard issuing fresh cards.
Citi also issued an AMEX card, which faces a similar ban from RBI.