People walk past a store of the French telecoms operator Orange in Paris, France, February 16, 2021. REUTERS/Sarah MeyssonnierOrange, France’s biggest telecoms firm, is looking for a new investor in its banking unit, a source close to the matter said, as it seeks to mitigate the heavy losses made by the four-year-old division.
Chief Executive Officer Stephane Richard trumpeted the launch in 2017 of Orange Bank as key strategic step toward the diversification of revenues streams for the group, which faces tough competition from rivals in France and Spain, its two biggest markets.
The online bank was developed thanks to the acquisition of a majority stake in lender Groupama Banque. Groupama, a French insurer, now owns 22% of the group. Orange controls the remaining 78%.
“The question is to find a partner to accelerate and continue the development of Orange Bank,” the source said. “It’s up to Groupama to say if they’re ready to exit or not,” the source added.
Spokesmen for Groupama and Orange declined to comment.
French business daily Les Echos earlier reported that this search for a new investor could lead to the sale of a controlling stake in Orange Bank.
Orange’s online bank had set up ambitious goals: 2 million customers ten years after its launch and 500 million euros ($602.95 million) in net banking income in Europe from its online bank by 2023.
By comparison, the division generated a net banking income of 79 million euros and had 1.2 million customers at the end of 2020 in France and Spain, according to the company’s account results.
The cost of Orange Bank’s activities also cut 160 million euros from the group’s total core operating profit last year. The total losses that stemmed from Orange Bank’s deployment total more than half a billion euros since 2017.