Recently, CitiBank has decided to quit the Indian market. This exit of the giant has created an opportunity particularly for those domestic private banks that are looking to scale up their credit card business.
Meanwhile, SBI cards, a subsidiary of State Bank of India has witnessed its share price jump 7.5% by the close of trade on BSE on Friday.
As per the payments industry sources, HDFC Bank which is the biggest player in the card business is hamstrung by the restrictions placed by the Reserve Bank of India (RBI) on acquiring fresh customers. SBI cards is also seen as a contender for Citi’s cards business.
Citi’s retail business may add about 6 to 10 per cent to the retail book of any bank and add about 5 to 8 per cent to the customer base of the larger private banks.
Whenever banks exit the market, they are sold off to other players. Most recent was the purchase of Royal Bank of Scotland by RBL Bank in 2018.
Who Can Acquire Citibank India?
Multiple banks are interested in the card business as Citi is most likely keen to sell individual business segments to different players said Suresh Ganapathy, research analyst at Macquarie Capital. He added that as far as bidding for the credit card book is concerned, smaller players like RBL, IDFC First Bank, etc, could be more aggressive.
Other names that are possibly looking at Citi Group’s retail business are SBI Cards, ICICI Bank and Axis Bank.
Also Kotak Mahindra’s MD and CEO, Uday Kotak said the bank is looking to expand its customer base in an inorganic way and hence Kotak Mahindra Bank may be a key contender to buy Citi Group’s retail operations, including the high-margin cards business.
Focusing on its global consumer banking business on four markets- Singapore, Hong Kong, London, and the United Arab Emirates, Citigroup announced that as a part of its global strategy it shall be exiting 13 international consumer banking markets.
Many banks are interested in this relatively small business even though the global giant is primarily focused on the affluent segment
However, Chief Executive Ashu Khullar of Citi India said that the team shall continue to serve the clients with the same care, empathy, and dedication and that there are no immediate changes in their operations as well as no immediate impact to their colleagues.
What Will Happen To The Customers?
- Customers of Citibank shall be transferred to the acquiring player which buys it
- Then services will be provided by the player to these customers
- Post the amalgamation, either same services as Citibank will be offered for some time or a new set of services shall be issued to those customers.