South based private sector lender, Lakshmi Vilas Bank (LVB) is planning to acquire the non banking finance company, CitiFinancial Consumer Finance India owned by CitiGroup. The NBFC wing of Citi has been ailing since quite some time.
JM Financial has been hired by LVB to carry out due diligence of CitiFinancial. The balance sheet of CitiFinancial stands at Rs 9000 crore. It has 116 branches and near about 1,600 employees.
"It's an interesting move for a conservative mid-sized bank which has stayed away from acquisitions," said a familiar source.
Citi has also been trying to do away with its NBFC wing. It was recently in talks with Kotak Mahindra Bank to sell CitiFinancial. The deal did not materialize due to mismatch of opinions on the right price for the buyout.
"CitiFinancial, like some of the other consumer finance firms, wants to get out of the low-income borrower segment. Many non-banking companies have burnt fingers due to a high loan delinquency level," said a senior official of a private bank. "But Citibank India does businesses like personal loans, mortgage, loan against shares and properties, and it possibly makes a greater sense to give retail loans through the bank rather than the finance company," he said.