Federal Bank has agreed to acquire a selected credit card portfolio from Standard Chartered Bank India covering 450,000 cards.
The deal values the portfolio at 1.5 to 1.6 times implied equity.
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The amount finally paid will depend on the balances outstanding when the transfer takes place.
The bank now has 800,000 non-co-branded credit cards and 1.3 million co-branded cards.
It said receivables in its non-co-branded card business are expected to rise by about 90% after the transaction.
The eventual size of the transferred portfolio, including the number of cards, will depend on the timing of the transfer and customer approvals.
Once completed, the purchase is expected to add to Federal Bank’s card business and increase its footprint in Tier-1 cities through an existing customer pool, the statement said.
“Geographically, the acquisition is a major strategic gain for Federal Bank, with approximately 75 per cent of the acquired card base concentrated in India’s top eight cities, leading to Federal Bank’s presence more than doubling in these locations,” the bank noted in a statement.
Reuters reported that Standard Chartered had about 640,000 credit cards in India at the end of March and is divesting the segment in which customers hold only credit cards and no broader banking relationship.
Federal Bank has more than two million credit card customers.
KVS Manian, MD & CEO of Federal Bank, said: “This acquisition represents a compelling and strategic addition to our retail credit franchise.
“The portfolio we are acquiring is of good quality, highly seasoned active credit card users, and is concentrated in the markets that align with our strategy. This further accelerates the growth of our already fast-growing cards business.”
In the previous year, Standard Chartered sold its India personal loan business to Kotak Mahindra Bank in a deal valued at $488m at the time.
