22
Fri, Oct
0 New Articles

Orange invests another €230mn in its banking subsidiary

News

Operator to acquire, for an undisclosed sum, Groupama's 21.7% stake in Orange Bank.

Orange is investing another €230 million in its banking subsidiary, Orange Bank. In March, Reuters reported that Orange was looking for a new investor in its banking unit.
 
Orange Bank and financial services right across the operator group’s footprint is one of the pillars for growth highlighted in the operator’s Engage 2025 strategic plan, launched at the end of 2019.

Accelerate progress

Orange Bank was launched four years ago, and the company says the capital injection will “speed up the growth projects envisaged in the bank's strategic plan”.
 
Orange Bank has 1.6 million customers in France and Spain, composed of about 800,000 banking customers and the other half buy insurance.
 
The company said in a statement that, “Orange Bank is now one of the top five neobanks in France after just four years of existence. This success continues to build with over 40,000 new customers every month and over €1 billion in loans to be extended by the end of the year.
 
“What’s more, while the majority of neobanks have continued to deploy a free-to-use model, over 90% of new Orange Bank customers subscribe to a billed service.”
 
Lessening losses

The statement also said that Orange Bank “should significantly reduce its losses in 2021 thanks to an increase in Net Banking Income, up 57% in H1 2021 compared with H1 2020, and decreased management costs owing to investments in the bank's processes over the past three years.
 
“As such, the management costs per customer have gone down by 35% since 2018. This trajectory – which includes substantial investments to create a new, modern, digital bank in line with Orange customers' expectations – was planned from the outset.

"The rate at which the bank is moving towards breakeven is comparable, or faster, than that of its peers in the neobanking industry.”

Full ownership

Orange has also agreed to acquire the 21.7% stake in Orange Bank held by Groupama, the French mutual insurance firm.
 
Groupama will however remain a major commercial partner having extended the exclusivity granted to Orange Bank for everyday banking and consumer credit until 2028.