Standard Chartered Bank is selling its credit card portfolio and Federal Bank has agreed to acquire a selected credit card portfolio from Standard Chartered Bank India. As per reports, Federal Bank may acquire around 450,000 cards. The deal values the portfolio at 1.5 to 1.6 times implied equity. The bank now has 800,000 non-co-branded credit cards and 1.3 million co-branded cards.
Standard Chartered PLC is a British multinational bank with operations in wealth management, corporate and investment banking, and treasury services.
The amount finally paid will depend on the balances outstanding when the transfer takes place. 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.
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.
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.
Why is Standard Chartered Bank selling its credit card business?
Standard Chartered Bank is selling part of its credit card portfolio in India as part of a strategic shift in its business. The bank wants to focus more on high-value customers and wealth management services instead of mass retail banking.
It is mainly exiting customers who only use credit cards and do not have any other relationship with the bank, as these are considered less profitable in the long term. By doing this, the bank aims to build stronger relationships with customers who use multiple products like savings accounts, investments, and wealth services.
The move also reflects the increasing competition in India’s credit card market, where domestic banks like HDFC, SBI, and ICICI dominate. As part of this strategy, Standard Chartered is selling around 4.5 lakh credit cards to Federal Bank. Overall, this decision is aimed at improving profitability, reducing non-core business, and focusing on its core strengths.
Earlier Citi Bank did the same
This is a common and accepted practice in the banking industry, and many banks do it as part of their business strategy. It can be beneficial for banks because it helps them focus on more profitable customers, reduce risks from low-value accounts, and improve overall efficiency. In some cases, it can also benefit customers if the new bank provides better services or offers.
However, there can be some drawbacks, such as changes in fees, terms, or service quality, and customers may feel uncomfortable with the transfer. Many banks, especially foreign banks in India, have followed similar steps—for example, Citi Bank sold its credit card business to Axis Bank. Banks often sell loan or credit card portfolios to concentrate on their core strengths and improve profitability.
