France-based telecoms group Orange is looking for a new partner to help it develop its online banking business, but CEO Stéphane Richard has insisted that there are no plans to sell or give up control of the Orange Bank unit and said it remains a strategic project for Orange.
In an interview with French broadsheet Le Figaro (paywall applies), Richard said the priority "is to continue to develop Orange Bank with a partner who shares our ambitions and contributes to our industrial project."
Les Echos (paywall applies) had reported that Orange's search for a new investor could lead to the sale of a controlling stake in Orange Bank, which Orange launched in 2017 as part of efforts to diversify its revenue stream.
At present, Groupama, a French insurer, now owns 22% of Orange Bank and Orange controls the remaining 78%. However, Richard said Groupama has shown signs of stepping back from Orange Bank in recent months. For example, the insurer did not participate in the most recent capital increase and thus diluted 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.
The telco launched banking services in Spain in 2019 and Orange Bank Africa in Côte d'Ivoire last year, in collaboration with banker-insurer NSIA.
The Orange Bank business segment has now been renamed mobile financial services, "to reflect the gradual integration of new activities within the segment" according to Orange.
Keeping calm and carrying on
Le Figaro pointed out that Orange Bank has accumulated losses of €643 million ($774 million) in three years. Richard appeared pretty relaxed about the situation, telling the paper "we are not worried" and indicating that this was consistent with what the group had planned.
He said Orange Bank should reach equilibrium in 2024, a year later than originally planned. He also pointed out that the bank now has 1.3 million users in Europe and 500,000 in Africa.
Richard said the group would prefer to find a banking partner with the right expertise and assets to help build up Orange Bank, and said several expressions of interest have been received. "We are convinced that there are significant synergies between the banking world and that of telecoms," he said.
Richard conceded that it had been more difficult to start up a banking unit than expected. But he said the situation has much improved since Paul de Leusse, deputy CEO of Orange, took responsibility for mobile financial services.
Richard also took the opportunity to have a dig at some of the prevailing views in France's business sector. He said he had been disappointed at the eagerness of some to predict the demise of Orange Bank. "In this country, as soon as you leave your area of expertise and take risks, you are ridiculed," he said.
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— Anne Morris, contributing editor, special to Light Reading