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Orange tries to get its money back out of Orange Bank

Orange Bank credit card.jpg

Orange has asked the Lazard investment bank to find a buyer for its loss-making financial services business, Orange Bank.

A report in yesterday’s Les Echos, the French financial newspaper, said Orange had told Lazard to seek “a new sale or alliance scenario in order to ensure the future of its loss-making subsidiary”.

Orange followed the report by telling the Reuters news agency: “In a very highly competitive environment in the banking market, Orange is considering all opportunities to develop Orange Bank’s activities and support its growth.”

It’s only a year since Orange bought a further 21.7% stake in the bank from Groupama, the insurance company that has been its partner in the project since 2016. What’s now Orange Bank started as a banking operation, with a licence, in Groupama. Originally the telco took a 65% stake in the bank.

What’s clear is that Orange has poured money into the venture with little sign of its becoming a viable business. In 2016 it said it aimed to reach €400 million in revenues in financial services by 2018.

According to Les Echos, Orange Bank has only 2.6 million customers and lost €880 million in the past five years.

It’s also clear that finding a new home for the bank is one of the clean-up projects for Christel Heydemann, who was named as the next CEO in January, finally taking over from Stéphane Richard in April.

Richard announced his decision to quit the role last November, following a conviction for misuse of public funds, but the then Orange board allowed him to work a further six months.

Since arriving in the role, Heydemann has reshuffled the management team. Jérôme Barré left his role as CEO of Orange’s Wholesale & International Networks division last month.

At the same time she replaced Paul de Leusse, who was CEO of Orange Bank, with his deputy, Stéphane Vallois, from 1 October. Less than two weeks later, Vallois and Heydemann are starting to take action on the loss-making bank.