Axis Bank’s acquisition of Citibank’s consumer banking business is expected to be completed by Q4 FY23, but the technology integration will take another 18 months due to differences in the technology platforms of both banks.

“Almost every technology platform they’re using is different from that of Axis and if we want to provide the most seamless experience to the customers of Citibank, it is incumbent upon us to ensure that the technology transition is smooth,” MD and CEO Amitabh Chaudhry told BusinessLine.

The first 8-12 months post takeover will be critical, said Chaudhry.

“The day we take over, we would ideally like that nothing changes for the customer because the technology has not transitioned.”

“For the new customers yes, but for the existing customers, nothing will change, including the brand,” he said, adding that Axis Bank has permission to use the ‘Citibank’ brand for a “sufficient time”.

At present, about 18 tracks are in play for the ongoing integration process, where teams from both the banks are working together to identify products on both the sides, the differences, and what needs to be done for Axis Bank to serve Citibank’s customers, he said.

Valuing Citibank’s business

Axis Bank has factored in any deterioration in the Citibank business prior to the acquisition being completed, and so far the data shows that the business is largely intact and in-line with expectations.

“Just to ensure that our downside is mitigated, we’ve said that beyond a certain deterioration in the franchise — both on the deposits, assets and credit cards side — we have mitigated our risks in the sense that there will be a change in valuation beyond a certain number.”

The valuation is also based on the cash flows, and the profitability that the business is generating and can generate over a period of time, assuming very limited growth, said Chaudhry, adding that there are “6-7 reasons why the Citibank franchise makes sense”.

Axis Bank is expected to acquire deposits of around ₹50,000 crore, assets of ₹27,000-28,000 crore and 60-100 corporate salary relationships from Citibank.

“Because Citibank has been in the country for 120 years, they have a set of clients that would have taken Axis Bank a lot of time to get,” Chaudhry said, adding this will help strengthen Axis Bank’s corporate salary franchise which is currently weaker than some peers.

“If I was to look at the similar valuations which exist in the marketplace, the credit card (business) alone will more than pay for the amount of money.”

Post the acquisition of the consumer banking business, Axis Bank is touted to become one of the top 3 players, both in terms of credit cards and wealth management.

Customer, HR integration

Axis Bank has started the process of customer integration and gaining customer consent, which entails multiple stages such as digital consent, telephonic conversations and even physical meetings in specific cases.

While some customers and employees may choose to migrate to other organisations, the general feedback has been that Citibank customers are happy to transition to Axis Bank, Chaudhry said.

“We have another 4-5 months to go and we have planned for it. We know when we will switch to the next mode and so on, of getting the consent,” he said.

Chaudhry is also confident that Axis Bank will easily be able to absorb Citibank’s 3,500 employees and 21 branches.

“Axis is expanding left, right and centre. We have 85,000 people, so much of the people we can absorb. No one will have to worry that they will not have a job equal in nature, or better, than what they had before,” Chaudhry said.

In instances where Axis Bank’s branches are in close proximity to Citibank, the bank may choose to shut down some Axis Bank branches because Citibank’s branch servicing is better, said Chaudhry.