Private sector lender Axis Bank on Wednesday announced that it has completed the acquisition of Citigroup's India consumer business from Citibank N.A. and NBFC consumer business from Citicorp Finance (India) Ltd. as going concerns.

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The transaction has been completed for an overall consideration of Rs 11,603 crore in cash, based on the contracted computation of closing positions of assets, AUMs and liabilities as of January 31, 2023. The acquisition has been completed without values being assigned to individual assets and liabilities for either business.

The cash consideration is subject to contractual and customary true up and / or true down adjustments and changes in business position between January 31-February 28, 2023.

As per M&A terminologies, True-up means a payment made post-closing of a transaction to adjust for any difference between the purchase price, which was determined on the transaction's closing date and the actual purchase price that become known only after the closing date. A true-up payment is made to the buyer only if the financial metrics of the target are worse than the parties agreed.

With this, the lender now becomes the owner of Citibank's India consumer business and NBFC consumer business. The post completion action items will be completed as per mutually agreed timelines.

Back in March last year, US bank Citigroup announced the sale of its consumer banking businesses, including credit cards, retail banking, wealth management, and consumer loans to Axis Bank as part of its plans to exit retail operations in 13 markets for Rs 12,325 crore, subject to customary and contractual adjustments.

With this deal, Axis Bank will acquire about 30 lakh unique customers of Citibank India, seven offices, 21 branches, and 499 ATMs across 18 cities.

Citibank, under its first woman CEO Jane Fraser, decided to exit the 13 markets to conserve capital and focus on higher-yielding revenue streams. Citi entered India in 1902 and started its consumer banking business in 1985.

The deal was approved by the Competition Commission of India in July last year.

The cash consideration along with any true-up or down payments will be accounted for as goodwill and other intangibles, which will entirely be amortised for accounting purposes in the current financial year.

Back then, Amitabh Chaudhry, MD & CEO, Axis Bank, told CNBC-TV18 that the Axis-Citi deal will be accretive in every which way. He added that a deal of this magnitude comes once in a lifetime as it has catapulted Axis as the number three player on the credit card and the wealth management side.

First Published:Mar 1, 2023 6:21 AM IST