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Local lenders lead race to buy parts of Citi’s India business


India’s large and medium size private sector banks like IDFC First, RBL Bank, and IndusInd Bank could be among the suitors for the different businesses US based Citibank has put on the block, Macquarie Research said in a note.

Citibank’s consumer banking business houses three relevant businesses namely, credit cards, wealth management and mortgages the bank may sell all these businesses separately as a portfolio sale, Macquarie analyst Suresh Ganapathy said in a report.

“There are several players who would be interested in acquiring the credit card business. We believe smaller players like RBL, IDFC First Bank etc could be more aggressive in terms of bidding for the credit card book,” Ganapathy said adding that Citibank has been losing market share in the credit cards segment over the past several years.

Macquarie expects other mid and large private sector banks to bid for the mortgages and wealth management porfolios of Citibank.

“As far as mortgages and wealth management is concerned, we believe some mid to large private sector banks could be interested in acquiring the portfolio as it compliments their existing strategy. Banks like IndusInd have been focusing on wealth management of late and could be interested in this piece,” Ganapathy said.

Macquarie estimated that Citibank’s consumer contributes 1/3rd to overall business and in terms of profitability, which is much lower than corporate business.

“In our view, Citibank will sell individual business segments to various players. For example IndusInd Bank acquired Deutsche Bank’s credit card business in 2011. The rest of the businesses like mortgages and wealth management could be sold to different players in our view,” Macquarie said.

Macquarie estimates that corporate banking contributes more than 80% to overall bottomline of Citibank in India.

“Even funding comes from lot of float money from corporates and Citi is very active in this segment. While overall market share of advances and deposits is just 0.6% and 1.1% respectively, we believe the market share in corporate loans, corporate CASA, transaction banking etc would be higher for Citi,” Macquarie said.

Citibank has a 0.60% market share in terms of advances in India and a higher 4.30% share on credit cards.



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