At the end of 2019, when Orange announced its latest five-year plan, called Engage 2025, its fledgling banking arm was given center stage as a key source of growth. But now, there are reports that Orange may sell a controlling stake in the four-year old bank amid heavy losses.
In Engage 2025, Orange identified three main sources of revenue growth in 2020-2025 – the Middle East and Africa (MEA) region, business-to-business (B2B) services, and financial services, including the Orange Bank. CEO Stéphane Richard would seem unlikely to give the bank that kind of profile today, though he insisted last week that there were no plans to give up control of the unit, and that it remained strategic to Orange.
In an interview with French newspaper Le Figaro, Richard acknowledged he was looking for a new investor, but not a majority stakeholder. His priority, he insisted, was “to continue to develop Orange Bank with a partner who shares our ambitions and contributes to our industrial project”.
French insurance provider Groupama currently owns 22% of Orange Bank and the telco owns the remaining 78%. Richard said Groupama has shown signs of defocusing on the venture in recent months, and did not take part in its most recent capital increase, diluting its stake from 35% to 22%.
“So we started looking for a new partner, possibly to replace Groupama, in order to support the second phase of Orange Bank’s development and its development in Europe and Africa. If we do not find a new partner, we will continue the venture alone,” Richard said. French analysts speculate that interested parties could include banking institutions such as BNP Paribas, Credit Agricole and Société Générale.
Orange launched the bank in 2017 and activated its first services in 2019, in Spain, and then last year it announced Orange Bank Africa, initially operating in Côte d’Ivoire, in collaboration with banker-insurer NSIA.
Orange Bank has amassed losses of €643m ($774m) in three years, but Richard said this was in line with the telco’s plans and expectations. He expects the banking arm to break even in 2024, a year earlier than originally planned, building on a user base that already numbers 1.3m in Europe and 500,000 in Africa, and aims to offer services across its whole European footprint, and many MEA markets, by 2025.
In 2017, Orange set goals of acquiring 2m banking customers by 2027 and €500m in net banking income by 2023. But at the end of last year, its banking income was just €79m, with a loss of €195m in 2020, and press reports indicated that the 1.3m European user figure includes many people who have not opened a bank account, but merely use, for instance, a smartphone insurance policy.
Despite its losses, Orange Bank is still expanding its operations, and in January, it acquired Anytime, a French neobank focused on small businesses and professionals.
“Anytime’s entry into the Orange Bank family marks a new development opportunity for us in a high value market segment while establishing strong synergies with Orange Bank and Orange,” said Paul de Leusse, CEO of Orange Bank.