American financial giant Citibank is cutting back its operations in India. Photo: AFP

Indian private lender Axis Bank will buy Citibank India’s retail banking business for US$1.6 billion, as the US banking giant looks to trim its global retail banking exposure.

The transaction comprises the sale of the consumer banking businesses of Citibank India, which include credit cards, retail banking, wealth management and consumer loans.

The sale also includes its shadow banking arm Citicorp Finance (India) Limited, which maintains commercial vehicle and personal loans portfolios. Citibank will, however, retain its institutional client business.

The buyout is an all-cash deal and will be the largest among the other six markets Citi has exited in the region so far. The transaction will be subjected to regulatory approvals and is expected to take 9-12 months to complete.

Citi’s 3,600 employees will move to Axis Bank by the first half of 2023. Citi India CEO Ashu Khullar said the deal with Axis is a “positive outcome for our staff,” adding that the company’s priority has been on securing its future.

The American lender had earlier assured its employees that there wouldn’t be any layoffs. Axis Bank MD Amitabh Chaudhry said: “We look forward to collaborating with Citi’s experienced senior leadership team and diverse talent pool, as they join Axis’ 86,000+ strong, dedicated workforce.”

For Citigroup, the sale is part of an ongoing strategy to do away with its retail banking operations in 13 countries across Asia and Europe, and focus on high-growth businesses such as wealth management.

It will also focus on investment and corporate banking in Asia. While making an announcement on April 16 last year, Citigroup CEO Jane Fraser said: “Citigroup lacked the scale to properly compete in the 13 markets it is leaving.”

Other than India, Citibank plans to exit Australia, Bahrain, China, Indonesia, South Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.

Ashu Khullar said: “Citi will also continue to harness India’s rich talent pool in the areas of technology, operations, analytics, finance and allied functional areas through its network of Citi solution centers that are located in five cities in India and support our global businesses.”

Other than Axis Bank, DBS Bank, HSBC, Kotak Mahindra Bank, HDFC Bank and ICICI Bank were seen as potential suitors for Citibank’s assets in India. Citibank had popularized the concept of credit cards and ATMs in India in the 1980s, but later ceded ground to rivals.

Meanwhile, Amitabh Chaudhry assured Citibank consumers that they will continue to access all the rewards, privileges and offers to which they were previously entitled after the acquisition.

All Citibank customers will have to provide consent to become Axis Bank customers after the deal gets regulatory approval. If they agree to continue, their accounts, credit cards and other business will change over, or else the relationship will terminate and they can exit with their deposits.