DBS can fund $2 bn bid for Citi India arm, says Bernstein
DBS Group Holdings Ltd. has sufficient capital to bid for Citigroup Inc.’s consumer assets in India valued at $2 billion without needing to raise additional funds, Sanford C. Bernstein & Co. analysts said.
It’s a case of “either go big or go home” for DBS to further expand in India where the Singapore-based bank also acquired Lakshmi Vilas Bank Ltd. in November, Bernstein analysts led by Kevin Kwek wrote.
DBS chief executive officer Piyush Gupta last month said he is interested in the US bank’s assets that are for sale in the South Asian country, as well as in China, Taiwan and Indonesia.
A takeover of Citi’s India unit would be DBS’S largest acquisition since 2001, when the Singapore firm spent $5.4 billion buying the Hong Kong unit formerly known as Dao Heng Bank Group Ltd.
Among the US. bank’s assets for sale, India stands out as “the crown jewel,” Kwek wrote.
Its credit card and wealth business would be attractive to any bidder given the country’s economic growth rate and population size, he added.
DBS has pledged to make more income outside its home turf, where the bank derived 70% of its S$4.7 billion profit in 2020.
DBS remains very disciplined on acquisitions and wouldn’t be drawn into any “bidding frenzy,” Gupta said April 30 when asked about his interest in Citi’s asset sale.
Citi plans to exit retail banking in 13 markets across Asia, Europe, the Middle East and Africa, as part of a strategy by CEO Jane Fraser, who took over in March.
In April, DBS said it would pay S$1.1 billion for a 13% chunk in China’s Shenzhen Rural Commercial Bank Corp.