Competition Commission of India (CGI) has approved the Rs 12,325-crore merger deal between Axis Bank and the Citibank announced on March 30, paving the way for the former to add 30 lakh new customers as it seeks to expand and consolidate its market position.
Axis Bank said that Citibank customers will not notice any change in the people they interact with at the bank, and that customer experiences will remain the same or improve after the merger.
The branches won't change either. Axis Bank said that the branches will stay the same, stressing that it would preserve most Citi branches as they are in desirable locations and are used by consumers. It added that the current services will either remain the same for customers or they will be improved after the merger.
Axis Bank-Citi Deal
Axis Bank will take over Citi's wealth management, personal loans, and credit cards operations that cater to the affluent market.
The deal includes the transfer of verticals like personal wealth management, including portfolio managing and retail customer accounts segments from Citi India to Axis Bank, and credit cards, which is the major portion of the deal. Citigroup had entered India in 1902 and started the consumer banking business in 1985.
Credit cards make up the majority of the deal, which entails the transfer of verticals from Citi India to Axis Bank, including personal wealth management, portfolio management, and retail client accounts.
Competition Commission said in a tweet on Tuesday that it has approved the "acquisition of Citibank, N.A.'s and Citicorp Finance (India) Limited's undertakings comprising their consumer banking activities by Axis Bank."
Axis Bank and Citi signed a definitive agreement in March for the transaction, which is expected to be completed by September 2024 and will provide Axis Bank with access to 30 lakh new customers.
Axis Bank Ltd, Citibank, N.A. (acting through its India branch), and Citicorp Finance (India) Ltd are the parties involved in the transaction.
The lenders stated in March that the transition would take 9-18 months, with the option of an additional six months. The transition cost will be around Rs 1,500 crore, of which Axis Bank will pay Rs 1,100-1,200 crore. Customers of Citi will be gradually transferred to the Axis Bank platform.
KYC will be performed again following the merger, as required by the regulator. Banks will also require specific consent in the transition processes prior to the closing date.
In an interview with Moneycontrol, an Axis Bank official stated that credit card issuance would be increased beginning in Q3 (October-December).
“We started the year at total CIF (cards in force) of 9 million. The RBI (Reserve Bank of India) has recently issued guidelines on card closure but if we keep that aside for a minute, I will envisage overall CIF at the end of year (March 31, 2023) at close to 12 million cards,” Axis Bank President and Head of Cards and Payments Sanjeev Moghe said in a statement.
He added that “these numbers are very strong. Obviously, at some point, by December or March, when the Citi portfolio gets added, it will be another 2.5 million cards."