Tag: Citibank India

IDFC First Bank leases Citibank’s erstwhile HQ tower in Mumbai’s BKC from Mindspace REIT, BFSI News, ET BFSI

Banking & Finance

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Mindspace Business Parks REIT has leased out an entire commercial building–Citibank India’s erstwhile headquarters in Mumbai’s business district Bandra-Kurla Complex (BKC)–to IDFC First Bank for a nine-year term, people aware of the development said.

K Raheja Corp and Blackstone Group-backed listed Mindspace REIT had acquired the building, The Square BKC, a marquee structure, from Citibank in 2019 for around Rs 400 crore.

IDFC First Bank has leased the 10-storey property spread over nearly 1.30 lakh sq ft at a monthly rental of Rs 280 per sq ft, taking the annual payout to Rs 44 crore. The agreement includes a rental rest clause with 15% escalation every three years, taking the total lease value to over Rs 450 crore over the nine-year term.

“The Square BKC (the erstwhile Citibank building) now stands fully leased,” Mindspace REIT said in its July-September earnings statement on Friday.

The deal is another sign of the recovery in office leasing, not only in peripheral but also in prime business districts following the aggressive vaccinations and the gradual return of employees to offices.

“We continue to witness strong leasing activity across our portfolio with over 2.1 million sq ft leased in the first half of this financial year,” said Vinod Rohira, CEO of Mindspace Business Parks REIT. “We remain increasingly confident of the commercial market outlook, buoyed by record tech hiring and growth trends, improved GCC prospects, vaccination coverage in our gateway cities as employees return to office. We are excited about the robust demand cycle re-emerging.”

However, he declined to elaborate on the BKC lease transaction.

ET’s email query to IDFC First Bank remained unanswered.

The REIT has recorded a robust gross leasing of 9 lakh sq ft, with an average rent of Rs 88 per sq ft a month across 11 deals concluded during the quarter. It has also concluded another build-to-suit lease of 5 lakh sq ft at Mindspace Juinagar in Mumbai Region. Over the last two quarters, it has leased 2.1 million sq ft in total.

Mindspace REIT has continued to collect over 99% of its gross contracted rentals and has reported net operating income of Rs 359.2 crore, up by 6.7% from a year ago.

The REIT has declared distribution of Rs 272.8 crore or Rs 4.60 per unit for the quarter, taking its annualised distribution yield to 6.7% on the issue price of Rs 275 per unit.

The record date for the distribution is November 18, payment of the distribution will be processed on or before November 27.

The REIT has raised around Rs 400 crore through issue of debentures at project level at 6.1%, helping the reduction in average cost of debt further by 15 basis points to 6.9% as on September-end.

The July-September quarter has already witnessed a sharp uptick in absorption of office spaces, led by leasing activity in the information technology and IT-enabled services sectors.

Lease transactions for large office spaces are being registered across key property markets, led by steady economic recovery, an aggressive vaccination drive across the country, and increasing number of corporates planning return of their workforce to office.

The IT, ITeS sectors are among the prime drivers of overall leasing activity in the top cities, and bulk hiring by these firms is expected to influence the demand for large quality office spaces.



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CLSA, BFSI News, ET BFSI

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Mumbai: The sale of Citibank’s India retail business is a good opportunity for existing banks to strengthen their affluent customer bases, said CLSA.

IndusInd Bank has the size and valuation constraints to acquire such an asset, while for HDFC Bank it is not a game-changer in terms of size but it is still a good asset, the brokerage said.

Citibank’s India retail business is up for sale as part of a global restructuring. On the block is the $3.5 billion retail asset book with a 4-6% market share of card or spending, sizeable home loan book and an affluent deposit base.

Reports suggest five banks including HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank and DBS Bank have been shortlisted.

The brokerage said the size of Citi’s business is too large for IndusInd Bank and its valuation does not favour deal-making.

Valuations would be a constraint for Axis Bank as well although it would be a favourable acquisition.

Citi’s affluent retail business fits well with DBS Bank India’s premium offerings and banking relationships, said CLSA.

For HDFC Bank, the retail book size of Citibank is not a game-changer but for Kotak Mahindra Bank, the business adds 20% to its current retail book and increases its card segment by three times, said CLSA. It is also complementary to its affluent customer base and Kotak’s premium valuation will aid it in a purchase, said CLSA.



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Bajaj Finance net rises 4%, bad loans jump, BFSI News, ET BFSI

Personal Finance

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The company’s assets under management grew 12 per cent to Rs 1.19 lakh crore as of June 30.

Mumbai: Bajaj Finance on Tuesday reported a consolidated net profit of Rs 1,002 crore for the quarter ended June 2021, a 4.2% increase over Rs 962 crore in the year-ago period.

The company said that the board of directors in their meeting also approved the appointment of Pramit Jhaveri, who headed Citibank India for nearly a decade, as an independent director on its board.

While the company’s assets under management (AUM) increased by 15% to Rs 1.6 lakh crore as of June 30, bad loans or gross non-performing assets (NPAs) rose faster to 2.96% of gross advances, from 1.4% a year ago. Shares of the company closed 1.2% lower at Rs 5,937.

“Since Q1 has been a large miss on expectations and provisioning buffer has declined, incremental bounce, collections and roll-back trends would be key monitorables. The management’s credit cost and growth guidance for the rest of the year is primarily anchored on these metrics staying healthy,” said Rajiv Mehta, analyst at Yes Securities.

“The deterioration in asset quality is not surprising given it was a Covid quarter without any regulatory moratorium and that the management had alluded to higher forward flows across overdue buckets due to collection constraints,” said Mehta.



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Citibank’s consumer banking, credit cards may be attractive for Indian lenders

Banking & Finance

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Citibank India’s consumer banking operations could be an attractive proposition for many domestic private sector banks, many of which are keen to shore up their retail book, especially credit cards.

With over 26.45 lakh credit cards as of February end 2021, Citibank India commands over six per cent of the country’s credit card market. In its annual results for 2019-20, the bank had said, “average spends per card is 1.4 times higher than the industry average”.

 

The lender also has 16.56 lakh outstanding debit cards as of February end 2021.

Citi brought the concept of credit cards and ATMs into the country in the 1980s.

Brokerage firm Jefferies said Citi’s exit from the retail business in India may open opportunities for Indian private banks, credit-card players and foreign banks in the country.

While private sector lender HDFC Bank, which is the top credit card issuer in the country with 1.51 crore outstanding cards as on February 28, 2021, has been directed by the Reserve Bank of India to temporarily halt the sourcing of new credit card customers, others like SBI Cards, Yes Bank and RBL Bank have been working to ramp up issuances.

“It will be interesting to see who acquires Citi’s business in India. In terms of credit cards, it could be a smaller or mid sized private bank or if the whole consumer banking business is divested, it could even be taken by a foreign bank keen on expanding its India operations,” noted a former banker who did not wish to be named on the issue.

As on March 31, 2020, Citi had 29 lakh retail customers and has nearly three dozen branches.

As part of an ongoing strategic review, Citigroup announced it would exit from consumer banking across 13 markets, including Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.

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K Balasubramanian, Citibank India, BFSI News, ET BFSI

Banking & Finance

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The government’s Atmanirbhar Bharat initiative can help increase the share of manufacturing to 25% of GDP by 2025, coming at a time when most global companies are evaluating their capital expenditure plans amidst US-China tensions, said K Balasubramanian, head of corporate banking group at Citibank India. This would provide a strong impetus to exports from India, foreign investment in the country, and job opportunities, he told ET in an interview. Balasubramanian also said that while the proposed bad bank is “a great initiative”, it will prove “an accounting gimmick” unless foreign investors are brought in. Edited excerpts:

What is your take on the government’s Atmanirbhar plan?
India’s Atmanirbhar programme is a great move to drive the manufacturing contribution to GDP to 25% by 2025. It is coming at an opportune time with most global companies evaluating their future capex plans with the developing situation between the US and China. This would provide a strong impetus to exports from India, besides FDI and job opportunities, already seen in the EMS (electronic manufacturing services) sector.

What role is Citi playing for it?
We have been actively engaged with our clients across the world, including the US, Korea, Taiwan, and Japan to attract investments into India. Over the past six months, we have done roadshows across Europe, the US and Asia, covering more than 250 global clients and had senior representatives from government departments talking to these global companies.

Why are Indian companies rushing to raise funds offshore?
With the surplus liquidity around the world and muted credit offtake, investors are chasing quality issuances, bringing down the credit spreads. Most deals continue to be priced at a very tight spread over secondaries. Several Indian corporates and financial institutions are locking long-term financing at attractive levels. We see this trend to continue in 2021 and it could be a record year for Indian foreign currency issuances.

What could lower funding costs further?
Indian companies over the past few quarters are gearing up to the ESG (environmental, social and governance) space. Several corporate houses are drawing up their ESG strategies, which, over a period of time, would become an important factor for accessing capital markets.

Does it make sense to borrow offshore, ignoring the local market?
Companies with international operations and global businesses use different pools of capital and diversify their borrowing base. The structural surplus liquidity situation is a phenomenon across the world on account of easy monetary policy by most countries and large Covid-related support extended by governments across the world.

Can a company borrowing in rupees benefit from overseas funding?
We are also witnessing an interesting phenomenon in the market, where corporates can borrow long-term rupee debt from banks/mutual funds and swap it to US dollar at sub-Libor level, bringing down the effective cost much lower than a traditional dollar borrowing level.

Do you see signs of green shoots when it comes to company growth?
There is a massive liquidity overhang in the system with banks placing about Rs 6-7 trillion with the RBI. The organic capex growth is muted except for select companies taking advantage of the Atmanirbhar scheme.

Will credit growth pick up?
We believe the credit demand in the economy will return in FY2022. The Union budget is a big catalyst with the government outlaying large infrastructure spends. We expect FY2022 to be a robust year with strong corporate rebound and growth coming back. Certain sectors such as real estate, infrastructure and automobile are seeing good activity since opening up.

Do you expect the proposed bad bank to make things better for the banking system?
Bad bank is a great initiative and much needed for the country, with most public sector banks carrying a high level of non-performing loans. This would free up capital for banks saddled with bad assets. It will be helpful for them to concentrate on regular good business. However, the true benefit of the bad bank would be achieved only by getting foreign/private sector money. Else, this would become an accounting gimmick.



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Citi elevates Arjun Chowdhry as Head of Global Consumer Banking, India, BFSI News, ET BFSI

Banking & Finance

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Citi India has elevated Arjun Chowdhry as its consumer banking business head managing the domestic retail banking, wealth management, credit cards, loans and mortgages.

Arjun Chowdhry, Consumer Business Manager (CBM), Global Consumer Banking, Citi India

He will join the Asia Consumer Leadership team to ensure alignment with global and regional priorities attracting the right talent to build world class teams.

Arjun will be reporting to Ashu Khullar, CEO, Citi India and Fabio Fontainha, APAC & EMEA Head of Retail Banking.

The appointment is effective January 8, the local unit of the American banking major said in a statement on Monday.

The bank said, “Chowdhry joined Citi as a management associate and has held diverse roles, starting with consumer operations, moving to wealth management, NRI (non-resident Indian) and deposit products, credit cards, loans and payments.”

Arjun holds a B.Sc. (Hons) degree from St Stephen’s College, Delhi, and a PGDM (MBA) from the Indian Institute of Management (IIM), Bangalore.

The bank said, “Citi follows a segment-led strategy with a clear focus on digitization of the entire banking life cycle, from acquisition through transactions and servicing, resulting in strong growth in new-to-bank clients, volume and wallet share. Citibank India continues to have the leadership in wealth management, being the largest foreign bank in terms of AUM. Citibank India has redefined digital engagement with a revamped Citi Mobile app. Digital is the most preferred channel for Citibank India’s consumer banking customer engagement, with about 75 percent of financially active customers accessing their accounts through the bank’s online portal and mobile app, over 96 percent transactions done via self-service.”



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Citibank India appoints Arjun Chowdhry as head of consumer business

Banking & Finance

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Citi on Tuesday announced the appointment of Arjun Chowdhry as Consumer Business Manager (CBM), Global Consumer Banking (India), effective January 8, 2021.

The bank, in a statement, said Chowdhry will manage all of Citi’s consumer businesses including retail banking, wealth management, cards, and mortgages, in India.

As per the statement, digital is the most preferred channel for Citibank India’s consumer banking customer engagement, with about 75 per cent of financially active customers accessing their accounts through the bank’s online portal and mobile app, over 96 per cent transactions done via self-service.

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