Barclays India sells loans book biz to Kotak Mahindra

Private sector lender Kotak Mahindra said on Tuesday it acquired the business loans portfolio of the Indian arm of Barclays.

With this acquisition, Kotak will have 6000 customers with total loans outstanding of about Rs 700 crore , Kotak said.

In December 2011, Barclays had said it would stop making retail loans as part of its new strategy to focus only on wealth management and corporate and investment banking operations in India.

[caption id=“attachment_615372” align=“alignleft” width=“380”] Reuters[/caption]

“The acquisition is in line with Kotak Bank’s strategy to add value to its existing business lines as it strengthens its business loans portfolio. It is also part of the company’s broader strategy of adopting inorganic growth routes,” Kotak Mahindra Bank Group strategy head Paul Parambi told PTI.

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However, he did not disclose the deal size citing confidentiality with the British lender, which also refused to comment.

The sold-out business was being managed by Barclays India Investment and Loan Ltd and had a book size of about Rs 700 crore involving 6,000 customers, Kotak Bank said, adding all these acquired loans are classified as standard loans as

per existing regulatory norms. The parties had won the go-ahead for the deal from the Competition Commission last week.

When asked whether Kotak Bank paid a premium or discount to Barclays, he just said “the valuation made sense for us and we are happy with the deal size.”

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Barclays, which has been trimming its exposure in India, had last year sold its loss-making credit card business to IndusInd Bank. Barclays has also been shedding/ merging it sales people as part of the global strategy to cut cost. Kotak loan book is about Rs 50,000 crore and its business banking portfolio is worth about Rs 5,000 crore or 10 percent of the advances book, Parambi said.

Foreign banks in India face stiff competition from local rivals such as top lender State Bank of India and No. 2 ICICI Bank, and have managed to capture only a small share of the country’s retail banking business.

Agencies