Private sector car loan lender, Lakshmi Vilas Bank (LVB) is planning to take over the non banking finance firm, CitiFinancial Consumer Finance India of CitiGroup. The NBFC arm of Citi has been sick for quite some time.
LVB has hired JM Financial to undertake proper diligence of CitiFinancial. The balance sheet of CitiFinancial is worth Rs 9000 crore and has 116 branches and about 1,600 employees.
A source in the know says, “It’s an interesting move for a conservative mid-sized bank which has stayed away from acquisitions”.
Citi has also been attempting to sell its NBFC division. It was lately in discussions with Kotak Mahindra Bank to sell CitiFinancial. The deal did not go through because of differences of opinions about the correct price for the purchase.
A top official of the private bank said, “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. 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”.