Macquarie Research has valued Citibank’s India retail business at around $2 billion, based on their Basel III disclosures in the country. This makes India the most valuable business among the 10 markets in the Asia-Pacific where Citi plans to exit consumer business. These 10 markets are collectively valued between $6.3 billion and $8 billion by Macquarie. Citibank is the sixth-largest card issuer in India. It has consistently had 15-25% higher spend per card against the industry average.
Citi’s consumer banking business comprises of credit cards, retail banking, home loans, and wealth management. It has 2.9 million retail customers, 1.2 million bank accounts and nearly 2.7 million credit card holders in India. It operates nearly 35 branches in the country and had deposits of Rs 1.6 lakh crore as on March 31, 2020.
It is the sixth-largest card issuer in India. It has lost market share in terms of card spends, from a 20% share a decade ago to 4% now, but it has consistently had 15-25% higher spend per card against the industry average, as per an analysis by Macquarie.
The higher mix of premium cards and corporate salary account cards in Citi’s cards portfolio make the business an interesting proposition.
According to a report by the Australian bank, going by SBI Card’s valuation, Citi’s 2.7 million cards would imply a figure of $2.7 billion. “This is above the top end of our valuation… To the the extent that a single buyer is able to purchase multiple businesses at once, we would expect some sort of valuation discount in order to expedite Citi’s exit,” the report said.
“As the deal does not come with bank licences nor distribution, the sale is likely to take place in fragments. Across the region, there are very few banks who have the requisite footprint to bolt-on all of Citi’s various retail businesses,” the report said.
The report identifies DBS, OCBC and StanChart as possible cross-border buyers, but is uncertain about HSBC.
Besides the 10 Asia-Pacific markets, Citi announced its plans to exit consumer banking from three other markets — the Philippines, Poland and Russia. A Bloomberg report quoted a Citi official stating that the bank was looking to sell its entire operations in India in one go.
“We have always been open to exploring sensible bolt-on opportunities in markets where we have a consumer banking franchise and where we can overlay our digital capabilities to serve our customers better,” a representative for DBS told Bloomberg.