Deutsche Bank to sell credit card arm

Deutsche Bank to sell credit card arm

Deutsche Bank to sell credit card arm

Deutsche Bank India is exiting its credit card business in the country. The German bank has received close to 11 bids, banking sources said. ICICI Bank, Karnataka Bank, Dhanlaxmi Bank, YES Bank and Standard Chartered Bank are among those who have evinced interest. Deutsche Bank has 1.5 lakh active cards and the outstanding of Rs 200-250 crore. Deutsche Bank declined to comment.

Dhanlaxmi Bank MD & CEO Amitabh Chaturvedi said, "We have evaluated the portfolio as it gives us ready access to a customer base and is a strategic fit. But we have yet to take a final view because the price is somewhat high."

The MD & CEO of another private sector bank, which has bid for the Deutsche Bank portfolio, said, "The customer profile is good and what makes it attractive is that the bank has been adding only platinum cards, having pared the classic and gold card base over time."

The credit card portfolios of most commercial banks were hit by the slowdown in the Indian economy which started in September 2008. Non-performing or bad loans rose to around 20% in 2009-10. Banks were compelled to scale back business, reintroduce fees and focus on top-end customers.

According to a senior payments industry official the cards business is seeing lower delinquencies with non-performing loans falling to 8-10%. According to RBI data, the credit card base has dipped to 18.21 million cards at the end of October 2010 from 21.18 million cards in October 2009. The good news is that spends on cards have jumped 27% jump to Rs 6,259 crore in August 2010 from around Rs 4,932 crore in April 2009.

Citibank India business manager(Cards) Sandeep Bhalla points out that 2009 was a transition year as banks moved away from simply acquiring accounts to focusing on growing spends on the cards.

HSBC India, with a card base of 1.5 million, is also growing its portfolio once again. CEO Stuart Davis told FE recently that the bank had started acquiring customers for its cards business though the pace of growth may not be as rapid as it was between 2004 and 2007.

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