HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and DBS India, five top lenders, are expected to submit their bids for Citi India retail businesses before 26 October 2021.
On 16 April 2021 Citibank announced its exit from the retail business in 13 countries, including India to expand its high yielding revenue streams and conserve capital. It is also facing cutthroat competition from the local banks in India. They will focus more on their institutional business. The valuation of Citibank exceeds $2 billion but Citi has lost a significant market share in its retail and credit book. It has not been able to focus on improvising the existing books and augmenting quality customers.
HDFC Bank and Kotak Mahindra Bank, the two most valued private sector lenders in India are regarded to be the front runners to win Citi India’s retail business that generates more than $1 billion in revenue. Other than these five banks, Citi bank has received bids from multiple domestic banks and is expecting to receive bids from global suitors to pick up its consumer assets.
Citi is India’ sixth-largest credit card issuer. Its total India business contributes 1.5% in profits to global book. The Indian retail business of Citi includes deposits, credit cards, wealth management and mortgage portfolio.
In India, it has more than 2.5 million retail customers, 1.2 million bank accounts and 2.6 million credit cards. After the announcement of its exit, it has lost more than 1,00,000 customers. The market share of advances and deposits is 0.6% and 1.1%.
It has lost market share on credit card spends from 20% to 4% in a decade. It has registered 15-25% higher expenditure per card against the industry average. The mixture of premium cards and corporate salary account cards makes the business attractive for the bidders.
Citi will continue to deliver innovative digital solutions and provide quality services to large and medium-sized corporates, MNCs, start-ups, etc in India. They continue to tap the rich talent pool in India.
Citi bank’s exit process is currently on and is being done promptly. It has received strong interest from bidders. The franchise is good for banks who do not have an existing credit card or wealth management book but it only makes sense if the bidders have good valuation.
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