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Citigroup (C) Finds $1.6B Buyer for India Consumer Businesses
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Making progress with its strategy refresh move, Citigroup Inc. (C - Free Report) announced that it reached an agreement with Axis Bank Limited to sell its consumer businesses in India.
This marks the eighth announced sale by the global lender since announcing market exits in April 2021. The sale is expected to release $800 million of allocated tangible common equity.
As part of the deal, Axis Bank will pay Citigroup $1.6 billion for the acquisition of the consumer business, subject to customary closing adjustments. The transaction is anticipated to close in the first half of 2023, conditional on required regulatory approvals.
With this, Citigroup will offload its consumer banking businesses of Citibank India, which include credit cards, wealth management, retail banking and consumer loans. Upon the deal closing, around 3,600 Citigroup employees supporting the consumer businesses in India will be transferred to Axis Bank.
The transaction also entails the sale of the consumer business of Citigroup’s non-banking financial company, Citicorp Finance (India) Limited. This consists of the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loan portfolio. With other market exits, the sale excludes Citigroup’s institutional client businesses in India.
Citigroup’s management noted, “As we move forward with this transaction, India remains a key institutional market for Citi. In line with our broader strategic repositioning, we will continue to support our institutional clients in this core market and across APAC, delivering the full power of our global network to enable their growth."
In April 2021, the big bank announced that its Global Consumer Banking segment would exit 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea, and release nearly $7 billion of allocated tangible common equity over time. Other than India, the company signed deals to sell seven consumer businesses in Australia, Indonesia, Malaysia, Philippines, Thailand, Vietnam and Taiwan. It also plans to gradually wind down its consumer banking business in South Korea.
In January 2022, the company revealed plans to exit the consumer, small business and middle-market banking operations in Mexico. Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth. These efforts will likely help augment its profitability and efficiency over the long term.
However, Citigroup has been revamping its underlying technology, risk management and internal controls as part of the remediation highlighted by the Office of the Comptroller of the Currency and the Federal Reserve. This, along with higher spending on compensation, technology, front-office expansion and Asia divestitures, might inflate expenses and hamper bottom-line growth.
Shares of this Zacks Rank #3 (Hold) company have lost 22.8% in the past six months, underperforming the industry’s fall of 4.9%.
First Horizon Corporation (FHN - Free Report) and The Toronto-Dominion Bank (TD - Free Report) signed a definitive agreement. Per the deal, the latter will acquire the former in an all-cash deal valued at $13.4 billion or $25 for each FHN common share.
Toronto-Dominion anticipates the FHN acquisition to close by Nov 1, 2022. The buyout is subject to customary closing conditions, including approvals from First Horizon's shareholders, and the United States and Canada regulatory authorities.
Randolph Bancorp, Inc. , the holding company for Envision Bank, entered an agreement to be acquired by Hometown Financial Group, Inc. Hometown Financial is the multi-bank holding company for bankESB, bankHometown and Abington Bank.
Randolph’s acquisition is expected to help Hometown Financial expand its market presence in eastern Massachusetts. Following the deal closure, Hometown Financial will have consolidated assets worth $4.4 billion and a branch network of 38 full-service offices across Massachusetts and northeastern Connecticut.
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Citigroup (C) Finds $1.6B Buyer for India Consumer Businesses
Making progress with its strategy refresh move, Citigroup Inc. (C - Free Report) announced that it reached an agreement with Axis Bank Limited to sell its consumer businesses in India.
This marks the eighth announced sale by the global lender since announcing market exits in April 2021. The sale is expected to release $800 million of allocated tangible common equity.
As part of the deal, Axis Bank will pay Citigroup $1.6 billion for the acquisition of the consumer business, subject to customary closing adjustments. The transaction is anticipated to close in the first half of 2023, conditional on required regulatory approvals.
With this, Citigroup will offload its consumer banking businesses of Citibank India, which include credit cards, wealth management, retail banking and consumer loans. Upon the deal closing, around 3,600 Citigroup employees supporting the consumer businesses in India will be transferred to Axis Bank.
The transaction also entails the sale of the consumer business of Citigroup’s non-banking financial company, Citicorp Finance (India) Limited. This consists of the asset-backed financing business, which includes commercial vehicle and construction equipment loans, as well as the personal loan portfolio. With other market exits, the sale excludes Citigroup’s institutional client businesses in India.
Citigroup’s management noted, “As we move forward with this transaction, India remains a key institutional market for Citi. In line with our broader strategic repositioning, we will continue to support our institutional clients in this core market and across APAC, delivering the full power of our global network to enable their growth."
In April 2021, the big bank announced that its Global Consumer Banking segment would exit 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea, and release nearly $7 billion of allocated tangible common equity over time. Other than India, the company signed deals to sell seven consumer businesses in Australia, Indonesia, Malaysia, Philippines, Thailand, Vietnam and Taiwan. It also plans to gradually wind down its consumer banking business in South Korea.
In January 2022, the company revealed plans to exit the consumer, small business and middle-market banking operations in Mexico. Such exits will free up capital and help the company pursue investments in wealth management operations in Singapore, Hong Kong, the UAE and London to stoke growth. These efforts will likely help augment its profitability and efficiency over the long term.
However, Citigroup has been revamping its underlying technology, risk management and internal controls as part of the remediation highlighted by the Office of the Comptroller of the Currency and the Federal Reserve. This, along with higher spending on compensation, technology, front-office expansion and Asia divestitures, might inflate expenses and hamper bottom-line growth.
Shares of this Zacks Rank #3 (Hold) company have lost 22.8% in the past six months, underperforming the industry’s fall of 4.9%.
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You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Inorganic Moves by Other Companies
First Horizon Corporation (FHN - Free Report) and The Toronto-Dominion Bank (TD - Free Report) signed a definitive agreement. Per the deal, the latter will acquire the former in an all-cash deal valued at $13.4 billion or $25 for each FHN common share.
Toronto-Dominion anticipates the FHN acquisition to close by Nov 1, 2022. The buyout is subject to customary closing conditions, including approvals from First Horizon's shareholders, and the United States and Canada regulatory authorities.
Randolph Bancorp, Inc. , the holding company for Envision Bank, entered an agreement to be acquired by Hometown Financial Group, Inc. Hometown Financial is the multi-bank holding company for bankESB, bankHometown and Abington Bank.
Randolph’s acquisition is expected to help Hometown Financial expand its market presence in eastern Massachusetts. Following the deal closure, Hometown Financial will have consolidated assets worth $4.4 billion and a branch network of 38 full-service offices across Massachusetts and northeastern Connecticut.