Indian private sector lender Axis Bank is looking to raise capital following its $1.6bn agreement to buy Citigroup’s retail operations in India. 

Speaking to the Hindu BusinessLine, Axis Bank MD and CEO Amitabh Chaudhry said the capital raise will probably be done via the qualified institutional placement (QIP) route. 

It is expected to be “large enough” to offset the impact of the acquisition on the lender’s core capital and support growth. 

Chaudhry was quoted by the publication as saying: “This (acquisition) will have an impact obviously on our capital ratios — 180 basis points (bps) straight off the bat plus another impact depending on the assets we acquire.

“On the risk-weighted assets we acquired (about INR270bn), there will be an impact. So, capital will have to deployed there also. It could be 30-50 bps.”

Chaudhry noted that the bank is growing so it needs capital regularly and the acquisition of Citi’s assets might require the bank to upfront that capital raise a little bit. 

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“Right now where we stand, I don’t think we’re looking to raise capital before FY23 results,” he added.

At the end of June 2022, Axis Bank’s capital adequacy ratio stood at 17.83% and its Common Equity Tier (CET)-1 ratio was at 15.16%.

Axis Bank’s last equity raise was in the financial year 2021 when the lender raises some INR100bn via the QIP route by issuing 238 million shares. 

In March this year, Axis Bank brokered a deal to buy Citi’s consumer banking business in India.