Orange Bank is for sale: which player is ready to take this risk?

Orange Bank was a project that was particularly close to the heart of the former CEO of the Orange group, Stéphane Richard. Admittedly far from the operator’s core business, online banking aimed to provide a complementary activity to those of telecoms, largely inspired by the success of Orange Money in Africa.

In 2017, Orange therefore acquired the shares in Groupama Banque to implement its plan. Unfortunately, Orange Bank has had a series of failures. From its launch, it experienced technical difficulties which prevented it from establishing itself in a market where players such as Boursorama Banque, Fortuneo and Hello bank! enjoy a high popularity rating.

Since its inception, Orange Bank has already lost 880 million euros and it has been forced to seek recapitalizations on several occasions. Our colleagues from Challenges recall that in 2021, the online bank “received a shot of 297 million euros – which did not prevent it from losing 156 million in stride”.

Three French banks in the running

Faced with this delicate situation, the new leader of the group, Christel Heydemann, seems determined to separate from Orange Bank. In this case, she asked the investment bank Lazard to find her a buyer.

According to Challenges, three major French banks – BNP Paribas, Société Générale and Crédit Agricole – have been watching the file since mid-January. The American fund Cerberus, which notably owns My Money Bank and the HSBC network in France, is also interested. On the other hand, the mutual banks Crédit Mutuel, Crédit Mutuel Arkea and BPCE passed their turn. The submission of offers is expected for March 8.

If the 2.6 million customers can attract takeover candidates (taking into account that some of the customers are directly linked to the telecom activity), the payroll is worrying. The boss of the group wants to sell all of the 900 employees without having to bother with a restructuring from the start of her mandate. If French banks could leave feathers there, Cerberus is used to layoffs. By the time HSBC France took over, he had cut more than 200 jobs.

What seems certain is that the bank will aim for a reverse sale: Orange Bank will be sold for a symbolic euro, with a check as a bonus. In 2021, Cerberus had already taken over the HSBC France network from the Sino-British bank for a check for 3 billion euros. In the summer of 2017, the AnaCap fund also took over the Barclays France network for a check. “Everything will depend on the amount that Orange will endow Orange Bank”, notes an investment banker interviewed by Challenges.

A step towards profitability?

In 2021, a first informal sale of the establishment had not succeeded, Stéphane Richard not wishing to sell off this asset. The situation would seem different today, which would whet the appetite of the candidates. Candidates also see it as an opportunity to strengthen their respective online banks (Boursorama Banque for Société Générale, Hello bank! for BNP Paribas and BforBank for Crédit Agricole).

Last year, Boursorama Banque had already negotiated the takeover of ING France customers, enabling it to garner more than 300,000 additional customers in a few months. France’s leading online bank with 4.3 million customers (end of September 2022) could reach critical size by taking over Orange Bank. The 2.6 million additional customers could allow it to return to the height of more traditional establishments such as BNP Paribas or Société Générale.

The operation will however be different for Orange Bank: Boursorama was content to pay a commission to ING France, in proportion to the number of customers recovered. In the case of the subsidiary of the telecom group, it will be necessary to take over a substantial payroll and a computer system specific to the establishment. For an online bank that seeks to reduce staff as much as possible, the model is not obvious. Even Boursorama Banque, which is nevertheless the leader in France, would double in size from 900 to 1,800 employees with this operation.

One thing is certain: the concentration and quantity of customers are two strong arguments for achieving profitability. It remains to be seen which of these potential buyers will be ready to take the risk, a bet that can quickly turn into a nightmare if the objectives are not met.