Post by : Badri Ariffin

In a significant development for India’s banking sector, Kotak Mahindra Bank and Federal Bank are evaluating a potential takeover of Deutsche Bank’s retail and wealth management operations in India. The Economic Times reported that this marks the German lender’s second attempt in eight years to exit the segment, with discussions now progressing on valuations and portfolio structure.

Early assessments from both Indian banks indicate active interest. The portfolio includes personal loans, select mortgage accounts and a large wealth management book that has long served as a strong feeder to Deutsche Bank’s corporate ecosystem. As reported, the bank’s India wealth unit manages assets of around Rs 25,000 crore, making it a valuable addition for any acquiring lender looking to expand its affluent-client footprint.

Deutsche Bank’s retail business contributed segmental revenue of Rs 2,455 crore in FY25, a steady rise from the previous year’s Rs 2,362 crore. The lender held Rs 25,038 crore in retail banking assets as of March 2025, disclosures cited by ET showed. This potential sale aligns with the global restructuring blueprint led by CEO Christian Sewing, aimed at boosting profitability and refining the bank’s market focus.

India remains the only non-European market where Deutsche Bank operates a retail franchise, a strategic anomaly the lender is now looking to correct. The bank currently runs 17 branches, several of which may eventually close depending on how the transition unfolds.

Industry watchers note that foreign banks in India continue to struggle against large domestic lenders that operate at lower costs and offer tighter pricing. Recent precedents include Citibank’s 2022 exit, where Axis Bank acquired its retail and credit card vertical for over USD 1 billion. Kotak Mahindra Bank also bought a Rs 3,330-crore personal loan portfolio from Standard Chartered earlier this year. Deutsche Bank itself was previously a seller in 2011 when it offloaded its credit card business to IndusInd Bank.

The discussions this time appear more determined, according to individuals familiar with the matter, though valuations may remain a sticking point as Indian lenders are known for stringent price negotiations. Approvals from both regional and global headquarters further suggest that the process could stretch over several months.

Meanwhile, Deutsche Bank’s India performance remains strong. The lender’s profit in the country rose 55% in FY25 to Rs 3,070 crore, supported by a healthy rise in interest and non-interest income. Total income grew 11% to Rs 12,415 crore, while operating costs stayed comparatively stable. The bank has consistently backed its India franchise with capital infusions—Rs 3,946 crore between 2018 and 2021, followed by Rs 5,113 crore in 2024, according to a Crisil report.

For Kotak and Federal Bank, the potential acquisition presents a rare opportunity: an established wealth management book, a ready retail base and deeper access to premium clients. For Deutsche Bank, it could finally mark a clean exit from a market segment where foreign players have increasingly struggled to compete.

If the talks progress as expected, this deal may become one of the most significant retail banking transactions in India since Citibank's exit—reshaping competitive dynamics in the premium lending and wealth management space.

#Business News #Economic