Citi India has 5 banks vying to buy its $2-billion retail business.
What’s At Stake?
The retail business revolves around its portfolio of credit cards, mortgages, wealth management and deposits.
The consumer business contributes one-third of overall India business in terms of profitability.
It has a market share of 0.6% in advances and 1.1% in deposits.
As of March 2020, Citibank has 2.9 million retail customers with 1.2 million bank accounts and 2.2 million credit card accounts.
It has 35 branches in India and is the 6th largest card issuer with a 4% market share.
It has deposits worth Rs 1.6 lakh crore.
The Banks In The Race
There are in total 4 domestic lenders: Axis Bank, IndusInd Bank, Kotak Mahindra Bank, HDFC Bank, along with one foreign lender- DBS Bank that have been shortlisted.
For DBS Bank, acquiring a piece of the Citi business in India would help it increase its presence here.
In the next step, 3 out of the 5 suitors will be shortlisted.
Citi will then negotiate with the 3 for a higher valuation.
It will also try to get a better deal for its credit card business, which is a high-grossing part of its operations.
Neither any of the 5 lenders nor Citi itself was willing to comment on the development.
Citi however did say that it has seen strong interest in its consumer business.
It added that the transaction process of deals “of this nature” goes on for months and will “require interaction with a wide range of interested buyers.”
Citi had announced back in April that it will exit consumer/retail operations in 13 countries across Asia and Europe, including India.
This is so as to conserve capital and shift focus to higher yielding businesses.
After announcing its exit, it lost over 100,000 customers.
Countries It Has Pulled Out Of
Citi Reassures Staff And Customers
It said that existing customers and staff will not be affected till the time the sale happens.
It further clarified that it is not closing down its consumer business here, but only exiting.
It will continue to focus on its wholesale business where it plans to increase investment.