What will happen to Citi Bank credit and debit cards after Axis Bank take over?

Axis Bank announced on Wednesday, March 30 that it will acquire US-based Citi's consumer business in India for Rs 12,325 crore. The two lenders signed a definitive agreement for the sale, which will involve the third largest private lender taking over Citi's credit cards, personal loans and wealth management businesses that are focused on the affluent segment.

Regulatory approvals are expected in nine months, after which the payment will be made and a complex integration process will begin.

After the acquisition, Citibank consumers will continue to avail of all the rewards, privileges and offers to which they were previously entitled, Axis Bank MD Amitabh Chaudhry said on Wednesday.

This is one of the largest deals in the Indian financial services space that will help Axis Bank close the gap with its peers such as the ICICI Bank and HDFC Bank.

The two lenders signed a definitive agreement for the sale, which will involve the third largest private lender taking over Citi's credit cards, personal loans and wealth management businesses that are focused on the affluent segment.

Regulatory approvals are expected in nine months, after which the payment will be made and a complex integration process will begin.

"Axis Bank has grown organically all these years and has scaled well. But our aspirations are bigger. This deal gives us that strategic thrust to close the gap between us and some of our peers," its chief executive and managing director Amitabh Chaudhry told reporters.

How will this impact Citi employees?

Axis Bank is keen to absorb nearly all the 3,600 employees working for the consumer banking business of Citi and will be eventually making offers to them at par with their current emoluments, and also raise the payouts to its existing employees for parity, Chaudhry said.

How will this impact Citi customers?

From a customer's perspective, all the privileges, loyalty points and services will remain the same, provided they consent to be serviced by Axis Bank.
Chaudhry said that all the 21 branches in prime locations will be retained.

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Apart from a consideration of Rs 12,325 crore or USD 1.6 billion which will be paid using the balance sheet strength, the deal also involves an equity requirement of Rs 3,450 crore for the loan book of over Rs 27,400 crore which will get transferred and also a payout of up to Rs 1,500 crore in integration cost, which will be paid by Axis to Citi for servicing the business till the merger gets complete.

Axis Bank's core capital will be impacted by 1.80 per cent and it will raise capital a few months down the line, Chaudhry said.

(With PTI inputs)