MUMBAI: Federal Bank has entered into an agreement with Standard Chartered Bank India to acquire the British lender’s select portfolio of credit card business for an undisclosed sum, as the Kochi-based bank seeks to expand its high-premium unsecured business.
The StanC portfolio comprises up to 4.5 lakh credit cards, as against Federal Bank’s existing customer base of 8 lakh non-co-branded cards and 13 lakh co-branded cards, increasing its non-co-branded credit card receivables by around 90%, the bank said in a statement on Thursday.
The final portfolio, including the number of cards acquired, will depend on the timing of the final transfer and customer consent. The transaction values the portfolio at 1.5–1.6 times implied equity. The final consideration will be linked to actual balances at the time of transfer, the statement added without offering a deal value.
Federal Bank has been in discussions with Deutsche Bank India to take over its retail and wealth business here. With the deal with StanC, that plan is now closed. The move could potentially leave Kotak Mahindra Bank as the sole contender for the German bank’s retail unit for nearly Rs 4,500 crore.
At the post-earnings presser on Wednesday, Federal Bank Chief Executive Officer KVS Manian said that while the bank is keen on expanding its wealth business for its high-value and affluent customers, there is no specific opportunity or inorganic growth that it is looking at at the moment.
For Standard Chartered Bank, the move to exit its credit card portfolio helps its plans to consolidate and sharpen its focus on the wealth and affluent segment, moving away from predominantly single-product relationships, which are represented in this transaction.
Geographically, the acquisition is a major strategic gain for Federal Bank, with around 75% of the acquired card base concentrated in the top eight cities, thus more than doubling its presence in these locations and enhancing its footprint in tier-1 markets. This substantially expands its access to urban, financially active consumers and reinforces its strategic priority of building deeper relationships in high-value urban segments.
"This proposed acquisition represents a strategic addition to our retail credit franchise, as the portfolio is concentrated in the markets that align with our strategy. This further accelerates our already fast-growing cards business. We see this as a significant opportunity to build long-term relationships with our target customers," Manian said in the statement.
Aditya Mandloi of StanC India said the move to exit this portfolio is in line with their strategic shift towards building deeper, multi-product relationships with clients.
Since the deal does not require regulatory approvals, the transaction is expected to close within this year itself.