In a significant move within India's financial sector, two prominent domestic lenders, Kotak Mahindra Bank Ltd. and Federal Bank Ltd., have placed binding bids to acquire the Indian retail banking and wealth management assets of Germany's Deutsche Bank AG. The portfolio, estimated to have a book size of at least $2.5 billion, marks a major opportunity for local banks as foreign players reassess their presence in the competitive market.
Advanced Negotiations for a Premium Portfolio
According to sources familiar with the confidential discussions, the suitors are in advanced talks with Deutsche Bank. The assets on the block include a lucrative mix of mortgage loans, small business loans, and wealth management operations. While negotiations with Kotak Mahindra Bank, founded by billionaire Uday Kotak, and Blackstone Inc.-backed Federal Bank are ongoing, the people cautioned that a deal is not yet guaranteed and could still fall apart.
Emirates NBD, which is concurrently planning to acquire a majority stake in RBL Bank Ltd., had initially expressed interest in the Deutsche Bank portfolio but ultimately chose not to submit a formal binding bid. Deutsche Bank has declined to comment on the developments, while Kotak, Federal Bank, Emirates NBD, and RBL Bank did not respond to requests for comments.
A Strategic Retreat and Domestic Expansion
This potential sale aligns with Deutsche Bank's strategic shift in India over recent years. The German lender, which currently operates branches in 16 Indian cities, has been narrowing its focus to concentrate on corporate and investment banking services for multinational and large domestic corporations. This move represents a retreat from the retail segment where scale is crucial.
The bank had previously attempted to exit this business in 2018, calling off talks to sell its retail and private wealth unit to IndusInd Bank Ltd. At the time, reports indicated Deutsche Bank did not receive a price it felt justified selling the profitable operation.
Reshaping India's Banking Landscape
The bidding war for Deutsche Bank's assets underscores two powerful trends in Indian banking. First, domestic lenders are aggressively expanding to capture the booming wealth management market, fueled by robust economic growth and rising deposits. Second, there is a clear wave of consolidation and acquisition, with foreign banks selectively exiting non-core markets.
For Kotak Mahindra Bank, acquiring these assets would significantly bolster its position as a leader in India's wealth and private banking space. The bank has been selectively growing its retail footprint, having acquired Standard Chartered Bank's personal loan portfolio in India in 2024. This pattern follows Axis Bank Ltd.'s completion of its acquisition of Citigroup Inc.'s India consumer business in 2023.
For Federal Bank, a successful deal would be a transformative leap, accelerating its journey from a strong regional presence to a formidable national financial services player. The bank gained a powerful ally last year when Blackstone committed to investing more than $700 million by buying warrants, becoming its largest shareholder and providing capital for such ambitious growth.
The flurry of activity, including interest from Japanese and other international lenders in Indian banking assets, highlights the growing appetite for well-established portfolios in one of the world's fastest-growing major economies. The outcome of these final bids will be closely watched as a bellwether for further consolidation in India's crowded banking sector.
