By Piyush Shukla
Axis Bank on Wednesday said it has completed the acquisition of Citibank India’s consumer and NBFC business portfolio for a total cash purchase consideration amount of Rs 11,603 crore.
The acquisition amount is around 6% lower than the earlier Rs 12,325 crore because of attrition of some credit card customers and deposit customers of Citibank India, the Axis Bank’s management said in a press conference on Wednesday.
The buyout, announced first in March 2022, will give Axis Bank access to 1.8 million Citibank India credit cards and result in Rs 39,900 crore of additional deposits in the bank’s liabilities book, said Amitabh Chaudhry MD & CEO, Axis Bank.
In addition, Axis Bank would get 3 million unique customers of Citibank India, seven offices, 21 branches, and 499 ATMs across 18 Indian cities.
This would also lead to a 150-basis-point increase in the bank’s CASA ratio to 46%. As of December end, Axis Bank’s total deposits stood at Rs 8.48 trillion.
While the bank had initially estimated over 2 million Citibank India credit card customers to transfer, a certain level of attrition of customers was seen on account of individual preference and changes in the credit card closure mandate by the Reserve Bank of India in October last year, according to the bank management.
The bank’s common equity tier or CET-1 ratio will be impacted by 177 bps in order to fund the purchase transaction. However, the lender does not plan to raise capital to fund the transaction. As on December 31, Axis Bank’s capital adequacy ratio stood at 17.60% and the CET-1 ratio was at 14.24%.
Consequently, the bank will take a one-time hit on its bottom line in Q4 of 2024 on account of charges related to harmonisation, goodwill and banker fees, among others.
While the end-to-end integration of the two banks’ internal systems will take about 18 months, Axis Bank is planning to complete the same by Q2 of 2024.
A total of 3,200 Citibank India employees joined Axis Bank with effect from Wednesday. “…Given the expertise that new employees will bring to the table, we view them as a significant force to help drive our GPS objectives. The premium portfolio and business synergies through this deal will help accelerate and add further momentum to our already-robust plans across priority segments,” Chaudhry said.
Axis Bank’s website also mentioned that the trademarks ‘Citi’, ‘Citibank’, ‘Citigroup’, the arc design, and all similar trademarks and derivations thereof are used temporarily under the licence by Axis Bank from Citigroup and related group entities.