MUMBAI: Marking its second major acquisition of a foreign entity after snapping up ING Vysya in November 2014 for Rs 15,000 crore, Kotak Mahindra Bank has agreed to acquire the personal portfolio of Standard Chartered Bank India. The British lender’s personal loan book is around Rs 4,100 crore as on date.
Kotak Bank, which was banned by the Reserve Bank in April this year from carrying out any online sales as well as new credit card customers citing poor IT system, in a statement Friday said the acquisition is aimed at expanding its retail lending business and the book is around Rs 4,100 crore now.
The joint statement, however, did not say what will be the deal value stating the total quantum of the loan book being taken over will be decided closer to the completion date.
It can be noted that foreign banks have been quitting retailing banking in the country. While HSBC, the oldest foreign lender in the country, was the first to do so in nine years ago, Citi followed suit in March 2023 by selling its entire retail banking portfolio to Axis Bank for Rs 11,603 crore.
However, HSBC re-entered the retail space again by launching the private banking space in July 2023, eight years after exiting the segment. Today its private banking business offers products and services such as investment products, mutual funds, bonds, portfolio management, insurance, and structured products.
The proposed deal with StanC will be of loans classified as standard loans and is expected to be completed over the next three months, subject to regulatory approvals, the statement said.
The bank will be acquiring the personal loan book that will be outstanding closer to the completion date of the deal.
It hopes to align the acquisition to its strategy to drive growth, expand market share and unlock opportunities in the salaried affluent segment.
Kotak Bank, which is the fourth largest private sector lender, and has more than 70 percent of its assets in the retail space, said the unsecured credit market offers a significant growth potential, especially in the higher-end segments.
"This transaction supports our retail assets growth strategy and reinforces our commitment to retail lending. It provides access to a high-quality customer base, and with Kotak group’s successful integration track record, we are committed to a smooth transition," said Ambuj Chandna, head of consumer banking at Kotak Mahindra Bank.
Kotak Bank is hopeful that the high-quality loan book from StandChart will allow it to build the affluent segment further, and reinforce its position in retail lending.
StandChart has assured a smooth transition for its retail customers, saying, "the decision to divest the personal loan book is in line with our focus to accelerate growth in the wealth, affluent and SME segment.
“India continues to be a key market for our network, with wealth & retail banking and corporate & investment banking as the cornerstones and we will continue to invest and grow here," said Aditya Mandloi, head of wealth & retail banking at Standard Chartered Bank.
