Kotak Mahindra, Federal Bank contending to buy retail, wealth mgt business of this foreign bank
Germany's largest lender Deutsche Bank is trying to sell off its retail and wealth management business. Two Indian banks Kotak Mahindra, Federal Bank are in the race to pick up the reins of these two business in which they see a lot of opportunity.
Kolkata: As a part of its global restructuring strategy Deutsche Bank is putting up the retail and wealth management business for sale. Two Indian private sector banks, Kotak Mahindra and Federal Bank are in the race to acquire these two lines of business.
Kolkata: Set up in 1870, Deutsche Bank is Germany's largest bank and one of the most famous German brands all over the world. Amid stiff competition from Indian banks and rising costs, it is putting up for sale two of its lines of business -- retail and wealth management. Two Indian private sector banks, Kotak Mahindra and Federal Bank are in contention to acquire these.
Significantly, Deutsche Bank is trying to sell these two lines of business for the second time in this country. It tried to get rid of them in 2017 butu without success. It is also an indicator that it is not being able to compete with Indian lenders on these two domains. Like some other banks, Deutsche Bank's costs are relatively higher and they are unable to provide affordable loans to tap into the growing Indian credit market. Deutsche Bank wants to scale down its retail business all over the world with a view to generating higher profits.
Personal loan, home loan, wealth management businesses on sale
Media reports have stated that Deutsche Bank is selling what constitutes one of the growing and most lucrative sectors of business for Indian banks. These are personal loan, home loan and wealth management businesses. The assets of Deutsche Bank in the wealth management segment is about Rs 25,000 crore. The retail business had total assets of Rs 25,038 crore at the end of FY25. In FY25, its revenue from the retail business was Rs 2,455 crore, which marked a 4% rise from FY24.
What can Kotak Bank, Federal Bank gain?
Both Kotak Bank and Federal Bank are exploring ways to aggressively expand their credit and wealth management business. On the other hand, Deutsche Bank has wealthy clients and corporate-linked debt investments and these carry a nice opportunity for both banks to expand inorganically. It might be recalled Kotak Mahindra Bank acquired the personal loans business from Standard Chartered for Rs 3,330 crore.
Significantly, Citibank has sold its retail business to Axis Bank. Deutsche Bank, too, earlier sold its credit card business to IndusInd Bank. Some foreign banks are gradually shifting focus on corporate and investment banking.
The health of Deutsche Bank
Deutsche Bank's profit in India stood at Rs 3,070 crore in FY25 -- up 55% from Rs 1,977 crore a year ago. The total income of the bank rose 11% in FY25 to touch Rs 12,415 crore against Rs 11,234 crore in FY24. Deutsche Bank has consistently infused equity in the Indian operations with Rs 3,946 crore being invested between 2018 and 2021. In 2024 Rs 5,113 crore was invested. The CEO of Deutsche Bank wants to raise revenue from around €32 billion in 2025 to around €37 billion in 2028. The target is to bring down cost-to-income ratio to below 60% by 2028 against 63% in the Q3 of CY2025.