Contenders for Citibank's retail arm still in due diligence stage

Lender may take time till December to finalise a buyer, no shortlist made so far, says a source

Citibank may take time till December to finalise a buyer for its retail arms, sources familiar with the discussions said.

There has been no decision on a buyer, or no shortlist has been made, said a source.

“The bank is in the process of answering all the queries raised by potential buyers. That process will end by the end of this month, and then bids will be invited in sealed envelopes. It will take at least two to six weeks to start seriously considering a buyer,” said the source, requesting anonymity.

Therefore, the question of a few banks being frontrunners do not arise just as yet, said the source.

Another source said virtually all banks are seeking details of the retail arm’s books for due diligence purposes. “After the window for due diligence ends, from next month, we will not entertain a single question,” said another source.

An email sent to Citibank did not elicit any response.

Citigroup on April 15 had announced it would exit retail banking in India and 12 other countries across Asia and parts of Europe to focus on its wealth management business, as it lacked the “scale” to compete in this space.

The decision to exit retail businesses from a few markets was one of the first moves by newly appointed CEO Jane Fraser after she took over the US-headquartered bank in February.

Along with India, Citigroup said it would also exit from its consumer franchises in India, Australia, Bahrain, China, Indonesia, Korea, Malaysia, Philippines, Poland, Russia, Taiwan, Thailand, and Vietnam.

The consumer banking vertical contributed 30.6 per cent to revenue at the end of March 2020 for Citibank in India, against 37.38 per cent in 2012-13 and nearly 39.19 per cent in 2009-10.

In 2012, with a 21 per cent market share, Citibank was the No. 2 credit card issuer in India, while expenditure per card was double the industry average; it also had a 30 per cent share in e-commerce spend. By 2020, its market share slipped to around 6 per cent and the position to sixth even though average card spend remained 1.4 times higher than the industry mean.

The customer base is also typically at the higher end of the spectrum for the bank, making it an attractive buy for India’s retail focused private banks.

Most of them are busy doing the due diligence process till the window closes this month.