Standard Chartered Evaluates Offers for Credit Card-Only Customers in India
Standard Chartered, an international banking group, is currently assessing offers from Kotak Mahindra Bank and Federal Bank to acquire up to 600,000 of its Indian customers who use its credit cards exclusively. This review is part of the bank’s initiative to minimize its exposure to single-product clients and aligns with a larger strategy to refocus on its core accounts.
Shifting Focus Away from Single-Product Clients
Over the years, Standard Chartered has been divesting non-essential segments of its Indian business in order to boost profitability. For instance, in the previous year, the bank sold its India personal loan portfolio, then valued at $488m, to Kotak Mahindra Bank. Now, the bank has received final bids from Kotak and Federal for its credit card book in India, which comprises customers with no other products at the bank.
Terms of the Potential Deal
Specific financial details of the proposed transaction have not been disclosed, and official comments from Kotak, Federal, and Standard Chartered are currently unavailable. It’s important to note that this move does not imply that Standard Chartered is completely withdrawing from the credit card sector. Instead, it signifies a strategic shift towards reducing “non-core accounts”.
Benefits for the Potential Acquirers
If either Kotak or Federal Bank acquires these credit card-only accounts, it could significantly increase their market share. It could also potentially lower the costs associated with acquiring new customers, sources suggest. At present, Kotak has issued 4.5 million credit cards in India, while Federal Bank’s total stands at 2 million. In comparison, Standard Chartered’s Indian credit card base numbers approximately 670,000.
Standard Chartered’s Future Plans
Should the deal proceed, Standard Chartered plans to retain around 70,000 affluent clients who have additional relationships with the bank. This decision is in line with the bank’s focus on the wealth and affluent segment, as evidenced by its recent introduction of an invite-only product aimed at higher-value customers. The bank’s interim chief financial officer, Pete Burrill, has stated that the bank aims to sell portfolios linked to single products or those outside its preferred client group.
Standard Chartered’s income from its India business reached $1.6bn last year, accounting for 7.8% of its global earnings. However, the bank is not alone in restructuring its retail presence in India. Other international lenders have also made similar moves due to fierce competition from domestic banks. For instance, Citigroup exited its retail business in India through a sale to Axis Bank, while Deutsche Bank is reportedly considering a sale of its retail and wealth management operations.
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