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Orange May Become Bank With Groupama TakeoverOrange May Become Bank With Groupama Takeover

The French telecom operator plans to launch a range of banking services in France in 2017.

Iain Morris

January 5, 2016

2 Min Read
Orange May Become Bank With Groupama Takeover

France's Orange has revealed it is in negotiations to acquire a 65% stake in Groupama Banque and set itself up as a fully fledged bank offering savings, loans, insurance and other financial services.

The operator has entered into negotiations with insurance giant Groupama, the owner of Groupama Banque, about a possible takeover. It plans to launch banking services in France -- under the Orange Bank brand -- in 2017 before rolling them out in other European markets, such as Spain and Belgium.

The initiative clearly ties in with Orange (NYSE: FTE)'s "Essentials2020" strategic plan to diversify its operations. Under that program, unveiled in March last year, Orange aims to generate about €400 million (US$431 million) in revenues from financial services by 2018. (See Eurobites: Orange Plans €15B Networks Upgrade.)

That target looks relatively modest -- Orange last year made about €39 billion (U$42 billion) in revenues across its various international markets -- but the move into banking would take Orange into new and unfamiliar territory.

Orange is keen to develop a mobile offering through the tie-up with Groupama and believes its network assets, retail presence and brand will aid its expansion into the banking sector.

Groupama, meanwhile, has expressed interest in strengthening its online banking business by developing a "new banking model" in partnership with Orange.

The French telecom incumbent already offers mobile money services in Africa and the Middle East and has also launched a mobile banking application called Orange Finanse in Poland.

Last year, senior executives flagged interest in expanding mobile money services into other countries outside Africa, but an acquisition of Groupama Banque would see the operator enter a much bigger financial services market. (See Africa's Data Dilemma.)

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Other than by developing a mobile banking offering, Orange has yet to indicate how it plans to differentiate its banking services from those of longer-established rivals.

By setting itself up as a bank, Orange will also become subject to new regulatory oversight amid post-2008 concerns about the risks that financial-services companies pose to the wider economy.

Groupama offers a range of insurance services in 11 countries, including France, and last year claimed to serve about 13 million customers.

Its Groupama Banque subsidiary -- which Orange could eventually acquire -- had more than 530,000 customers, outstanding deposits exceeding €2.1 billion ($2.3 billion) and outstanding loans amounting to around €2 billion ($2.2 billion) last year.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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