US banking major Citibank’s move to exit its consumer retail operations in India is drawing a host of investors.
The New York-based lender announced on April 16 that it will shut down its savings bank, credit cards and personal loans divisions in India as part of its global decision to exit 13 markets to focus on wealthy regions around the world.
The bank, however, will continue with its wealth management and institutional business in India.
The potential suitors for Citi’s assets in India include Singapore-based DBS Bank, HSBC and Indian private lenders such as Kotak Mahindra Bank, HDFC Bank and ICICI Bank.
DBS Bank is said to be in advanced stage talks with Citi and it may take up the entire consumer banking operation, The Hindu Business Line reported.
DBS Bank has been scaling up its presence in India and it was the first among large foreign banks to start operating as a wholly-owned, locally incorporated subsidiary in India. Last November it acquired Lakshmi Vilas Bank and amalgamated it with DBS Bank India.
This acquisition had given DBS Bank a strong presence in the small and medium enterprises segment. Buying Citi’s assets could give it a foothold in upper-end consumer banking.
As of March 2020, Citibank India had close to 3 million customers in retail, 2.2 million credit cards issued and 1.2 million bank accounts. It has 35 branches and employs 4,000 people in the consumer banking business. It has also indicated there won’t be any layoffs or closure of offices in India.
Earlier, there were reports that Citibank was exploring options to sell its retail consumer banking business in a piecemeal manner. It is seeking a valuation of more than 40 billion rupees (US$534 million) for its credit card vertical, the Economic Times reported.
Citibank had popularized the concept of credit cards and ATMs in India in the 1980s, but later ceded ground to rivals. Presently it is the sixth-largest card issuer in the country and its market share in terms of card spends has come down to 4% from 20% a decade ago.
But a Macquire analysis stated that Citi consistently had a 15-25% higher spend per card against the industry average. Market observers also feel that the acquirer of the bank will get high net worth clients and bank accounts, and high-quality trained staff.
Other than India, Citibank plans to exit the Australia, Bahrain, China, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam markets.
Apart from the US, Citi plans to concentrate on consumer banking in four wealthy markets – Singapore, Hong Kong, the United Arab Emirates and London. Market analysts feel that large-scale disruption caused by the pandemic has forced Citi to take such a decision.
While making the announcement, Citi’s Global CEO Jane Fraser admitted the bank lacked the scale to grow in many markets. “Citigroup lacked the scale to properly compete in the 13 markets it is leaving,” she said.