IndusInd to buy Deutsche Bank's India credit card biz

Mumbai: IndusInd Bank is poised to acquire Deutsche Bank India’s credit card business. The bank has narrowed in on Axis Bank and IndusInd Bank from the initial 11 bidders. Deutsche Bank has 1.5 lakh active cards and outstandings of R200-250 crore.

“IndusInd is close to striking the deal with Deutsche Bank and could offer a small premium to the amount outstanding on the current credit card base which is in the range of R225-250 crore,’’ said a source in the know of the development. A few banks, including Dhanlaxmi Bank, Karnataka Bank, Standard Chartered Bank who had evinced interest initially, opted out of the buyout citing high valuation for a small portfolio.

“The deal is in its last leg and IndusInd seems to have an edge over Axis Bank as it would be able to absorb the 217 people employed in the credit card division of Deutsche Bank. It would be a lift and drop deal with IndusInd as it is in the process of launching its credit card business,” said another banker in the know of the development, adding that the deal is expected to conclude over the next quarter.

IndusInd Bank in November 2010 had appointed Anil Ramachandran to head its credit card operations. Ramachandran was earlier with Deutsche Bank as head credit cards business for India. He has also worked with Citibank where he was associated with the credit card function in various senior positions.

“Unless you have scale it is difficult to run a profitable credit card business. We would continue to focus on mobilising retail deposits and grow the mortgage business,” said a senior official from Deutsche Bank on the condition of anonymity.

Credit card portfolios of most commercial banks were hit by the slowdown in September 2008. Non-performing loans rose to around 20% in 2009-10. Banks were compelled to scale back business, reintroduce fees and focus on top-end customers. “The quality of the portfolio has thrown up no surprises as all credit card players did go through a rough patch in 2009-10,” a source, involved in the deal, said.

Source: Financial Express