No immediate change in products, Citi tells customers


Citibank India has written to its consumer customers, seeking to reassure them that no immediate changes are being made to the products. In a letter dated March 31, the bank advised customers that Axis Bank’s acquisition of its consumer business is expected to close in the first half of calendar year 2023.

It is crucial for Citi to minimize the erosion of its retail customer base during the eight-to-12-month transition period, since the agreement with Axis Bank includes clawback terms to account for higher than expected from the client and the employee of the foreign lender. base. The deal value of $1.6 billion (Rs 12,325 crore) is subject to renegotiation under such a scenario. Axis Bank will shell out an additional Rs 1,500 crore to pay for the cost of the transition, most of which will go to Citi.

“Let us reassure you, once again, that there will be no immediate changes to any product you hold with us, be it credit cards, loans, deposits, investments or otherwise.All of our consumer banking operations, including our call centers, ATMs, relationship teams, branches, the Citibank online portal and the Citi mobile app, will continue to operate as they do. are doing today,” Arjun Chowdhry, Country Commercial Director – Global Consumer Bank, Citibank India, said in the letter to clients.

The announcement of the deal is just the start of a process, Chowdhry said in the letter, and while there will be a transition, the bank will ensure it is done in the most efficient way. possible transparent. “We will ensure that you are duly informed of all relevant changes to your services and products, with sufficient notice,” the letter states.

An email requesting an official response from Citi went unanswered until press time.

Retaining staff and the high-end customer base of Citi’s Indian business are key to making the deal meaningful for Axis. Some sections of the market viewed the deal as a costly gamble on Axis Bank’s part. After the deal was announced, Jefferies analysts wrote that Axis’ Common Equity Tier 1 (CET1) capital adequacy ratio would fall to 12.8% from 15.3% in December 2021, which is significantly lower than the average of 16-17% for other private companies. banks.

“The all-in acquisition cost involves 21x the PE (price/earnings) on FY2020 normalized earnings, which we believe is higher as Citibank’s standalone growth has been modest in India,” said said Jefferies.


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