Money & Banking

DBS in ‘advanced talks’ to buy Citi’s consumer banking business in India

Surabhi Mumbai | Updated on April 25, 2021

(FILES)A man at a Citibank branch at the US bank Citigroup world headquarters on Park Avenue, in New York, November 17, 2008. Citigroup said August 29, 2012 it had agreed to pay $590 million to settle a suit by investors who accused the bank of misleading them on its subprime mortgage-based security losses in 2007-2008. The agreement settled the four-year-old class-action suit that arose from the collapse of the US real estate market, which savaged the bank's share price in part due to its heavy losses on collateralized debt obligations. AFP PHOTO/Emmanuel Dunand/FILES   -  AFP

Many also be interested in Citi’s credit card business

Citi, which recently announced plans to exit consumer banking operations in 13 markets, is understood to be in talks with a number of foreign lenders, including DBS Bank, for its India business.

Sources close to the development said Citi is keen to exit its India consumer banking operations soon and would like to sell the entire set-up in one go.

“Talks with DBS Bank are at an advanced stage and they are keen to take up the entire consumer banking operation,” said a person familiar with the development.

Citi declined to comment to an email query sent by BusinessLine on the issue.

“At this juncture, the details are still unclear. However, we have always been open to exploring sensible bolt-on opportunities in markets where we have a consumer banking franchise (India, Indonesia, China and Taiwan) and where we can overlay our digital capabilities to serve our customers better,” a DBS spokesperson said in response to an email query by BusinessLine.

Separately, many banks are understood to be keen on Citi’s credit card business in India, which had 26.4 lakh customers as of February 2020.

Why DBS?

DBS Bank India Limited is first among large foreign banks to start operating as a wholly-owned, locally incorporated subsidiary in India and has been keen on expanding its operations in the country.

In November, Lakshmi Vilas Bank was also amalgamated with DBS Bank India, giving it access to a large customer base.

However, it could take at least six months for any transaction to be finalised, according to analysts.

According to a report by JM Financial, Citi’s Indian consumer business has a sizeable presence, with retail loans totalling about ₹3,200 crore.

“It needs to be seen whether all these businesses will be sold together or piecemeal. Also, payment consideration, in cash vs stock, will be a critical determinant to decide the eventual buyer. Since Citi functions in India through a “branch route” versus a wholly-owned subsidiary (like DBS Bank), the transaction will mostly be asset sale. In our view, the process could take 6-12 months until a final winner emerges,” it said.

Published on April 25, 2021

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