Private sector lender IndusInd Bank will acquire the credit card business of Deutsche Bank’s Indian operations for a little more than Rs 224 crore. As part of the deal, IndusInd Bank would also get the services of around 200 professionals from the German bank's credit card division.
“The book value of Deutsche Bank's credit card business in India is Rs 224 crore. We are paying a small premium on it,” said an IndusInd official.
The deal would mark IndusInd Bank’s foray into the credit card business. The buyout would give the bank access to close to 200,000 Deutsche Bank card holders. According to sources, IndusInd Bank would initially offer credit cards to its own customers and high net worth individuals. Deutsche Bank's credit cards were aimed at the mass affluent segment.
After the acquisition, which is subject to regulatory approval, the operating platform of the card franchise, including technology and staff, will move to IndusInd Bank. Deutsche Bank has around 200 employees in its credit card division.
In November, 2010, IndusInd Bank had appointed Anil Ramachandran as the head of its credit card business. Prior to joining IndusInd Bank, Ramachandran was heading Deutsche Bank’s credit card business in India.
“The strategic intent behind this acquisition is to offer targeted credit card products for chosen client segments. Cards are an important element in our segment offering. Deutsche Bank has a stable cards portfolio and the acquisition gives us a head start in building the cards business,” said Sumant Kathpalia, head of consumer banking, IndusInd Bank.
Along with IndusInd Bank, several other lenders, including Axis Bank, Barclays, Dhanlaxmi Bank, Karnataka Bank and Yes Bank, were interested in acquiring Deutsche Bank’s credit card business. However, most of them backed out, since they found the valuation inappropriate.
Deutsche Bank said its decision to exit the credit card business would not hurt its plan to expand retail operations in India. Credit card operations account for less than two per cent of Deutsche Bank’s total business in India. “Our agreement with IndusInd Bank is in line with our desire to build our retail banking business in India around our core strengths of deposits, wealth management and secured lending,” said Prashant Joshi, Deutsche Bank’s head of private and business clients in India. Currently, Deutsche Bank has 15 branches in India and plans to add a few more this year, Joshi said.
