Standard Chartered’s credit card portfolio with Federal Bank; Big boost to retail loan business

• Standard Chartered’s credit card portfolio with Federal Bank; Including 4.5 lakh customers
• Federal Bank’s Big Deal; Acquisition of Standard Chartered’s card business
• Promotion of retail lending business; Federal Bank will take over credit card portfolio

Federal Bank to acquire select credit card portfolio of Standard Chartered Bank (India). Loans in retail sector Federal Bank has agreed to an agreement to acquire a select ‘credit card portfolio’ (customer pool) of Standard Chartered Bank in India, which will further strengthen the business.

After completion of this transaction, Federal Bank’s credit card customer base will be expanded and will further strengthen Federal Bank’s customer base in ‘Tier-1’ cities with the addition of high quality as well as experienced customers. The transaction will accelerate the Federal Bank’s ‘Retail Relationship’ strategy; Also, the deal will enable the bank to strengthen its position with customers in the retail segment, particularly in the unbranded credit card space. The transaction will help Standard Chartered Bank to focus more on its wealth management and affluent/high income segments in India.

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It will also accelerate the bank’s previously announced strategy of building a broader and more multifaceted relationship with customers rather than a ‘single product’ relationship. The portfolio to be acquired by Federal Bank includes around 4.5 lakh credit cards. In contrast, Federal Bank currently has its own customer base of 8 lakh ‘non-co-branded’ cards and 1.3 lakh ‘co-branded’ cards. The acquisition is expected to increase outstanding balances on Federal Bank’s ‘non-co-branded’ credit cards by approximately 90 percent. The exact number of cards will depend on the time of physical transfer and the consent of the respective customers.

As per Federal Bank estimates, this portfolio is valued at around 1.5 to 1.6 times the ‘underlying equity’. The final amount paid by Federal Bank for this transaction will be based on the actual outstanding balance on the cards at the time of transfer. Considering the geographical expansion, this acquisition is a big strategic step for Federal Bank. About 75 percent of the card customers being acquired are located in the top 8 major cities of India. This will double the presence of the Federal Bank in these major cities. The transaction will significantly increase the bank’s expansion in the large metro (‘Tier-1’) markets.

Also, the bank will reach more economically active customers in big cities. This will strengthen the bank’s strategy of building strong relationships with customers in high-income urban segments. Commenting on the agreement, MD and CEO of Federal Bank K. V. S. Manian said, “This acquisition is a very effective and strategic step for our ‘Retail Credit’ business. The portfolio we are acquiring is of very high quality. This portfolio consists of active credit card customers with long experience and these customers are concentrated in markets that are aligned with our strategy. This will further accelerate our rapidly growing credit card business. It is a great opportunity for us to serve these experienced customers even better and build long-term relationships with them.” The opportunity is there and through this opportunity we will be able to become their most preferred banking partner.”

Virat Sunil Diwanji, National Head, Consumer Banking, Federal Bank said on the occasion, “We warmly welcome these customers of Standard Chartered to the Federal Bank platform and look forward to interacting with them. We are committed to making this transition seamless and very smooth. During this process, the customers will benefit from all the financial plans and services of Federal Bank. Our endeavor is to build a stronger and lasting relationship with these new customers. Aditya Mandaloi, MD and Head of Wealth & Retail Banking (India & South Asia), Standard Chartered Bank, said of the deal, “This decision follows a strategic shift to build stronger and more multifaceted service relationships with our customers.

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Credit cards business will continue to be a core part of our services; At the same time, we are investing in further strengthening our ‘Wealth Platform’ and enhancing the quality of facilities offered to affluent customers, including the recently launched ‘Metal Beyond Credit Card’. India is a very important market for Standard Chartered. We will focus on investment in this market. Also the focus will be on strengthening our presence in the market here. Thus, uninterrupted service will be provided to the customers. We will continue to work closely with Federalbank to ensure a smooth and seamless transition for our customers.”The proposed transaction does not require any regulatory approvals and is expected to close this year, i.e. 2026. Further details will be disclosed in due course in accordance with the regulatory requirements applicable to the acquisition. Earpwood Capital Private Limited, the advisor for the transaction, is acting as the exclusive financial advisor to Federal Bank. Khaitan & Co. Acting as Legal Adviser to the Bank. KPMG is Acting as Due Diligence Adviser to Federal Bank. Trilegal is Acting as Legal Adviser to Standard Chartered Bank, India.