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Nirmal Bang Report
Axis Bank Ltd. has announced the acquisition of Citi India’s consumer operations, covering loans, credit cards, wealth management and retail banking.
This acquisition should help Axis Bank further its retail banking agenda and increase its lead as the fourth largest cards player over RBL Bank Ltd. (fifth largest). Also, the gap between ICICI Bank Ltd.(third largest) and Axis Bank would narrow down from 5.8% (pre-acquisition) to 2.3% (post-acquisition).
The transaction is Rs 123.3 billion, which is 18.7 times normalised earnings. Citi India’s portfolio primarily consists of affluent customers, as indicated by spend per card (1.8 times of Axis Bank).
Besides gaining a cards portfolio and cards market share, Axis Bank also gets future cross-sell opportunities through the acquisition of an affluent client base (addition of Rs 1,109 billion assets under management from Citi Wealth).
This acquisition is in line with Axis Bank’s objective to increase its retail footprint across the country.
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