Payward acquired Saldo Bank, while Kraken enters the traditional financial sector

Kraken’s parent company, Payward, plans to acquire the Lithuanian bank Saldo Bank, aiming to expand its traditional financial services offerings.

Kraken’s parent company, Payward, has agreed to purchase Saldo Bank, which is based in Lithuania. This move aims to create a regulated European deposit and lending platform for the crypto industry, marking a significant step towards expanding into traditional financial services.

Payward has signed a binding agreement to acquire Saldo Finance Oy, a Finnish holding company that holds shares in Saldo Bank UAB. The transaction is expected to be completed in 2027, but requires regulatory approval and fulfillment of all necessary conditions. The exact financial terms have not been disclosed.

Saldo Bank holds a professional banking license in Lithuania and currently operates in Lithuania, Finland, Sweden, and Germany. Its services are also available in the Netherlands through a “passport mechanism.” The bank offers retail customers fixed-term deposits, consumer credit, and loans to small and medium-sized enterprises (SMEs). It also provides embedded financial services to other fintech companies.

What value will Saldo Bank bring to Payward?

This acquisition gives Payward the ability to operate a regulated bank balance sheet within the EU. Once the transaction is completed and approved, Payward says its banking division will offer interest-bearing deposits, secured and unsecured loans to SMEs, consumer credit, and “Bank as a Service” (BaaS) infrastructure. In addition, Saldo brings capabilities for issuing bank cards, access to SEPA payment channels, and embedded lending technologies.

Currently, Saldo operates retail time deposits in Lithuania, Finland, Sweden, and Germany. It provides consumer loans in Lithuania, Finland, and Sweden, as well as loans for small and medium-sized businesses in Lithuania and Finland. Its credit cards are already available in Finland, with plans to launch them in Sweden by 2027.

Arjun Sethi, CEO of Payward, said, “A bank regulated by the EU is essential for us to serve European customers in a manner that befits a leading financial institution. It allows investors to hold assets, transfer them freely, and use them for investment purposes.”

This transaction aligns with Payward’s previously announced strategy. In August this year, the company stated that it was considering obtaining a full banking license outside the United States, in order to streamline its operations related to transactions, banking management, and asset management.

From an investor perspective, why choose acquisition rather than applying for a license?

With Saldo’s addition, Payward gains direct sources of income from deposits and loans, thereby reducing its reliance on cryptocurrency trading costs. At the same time, it also increases its obligations regarding capital and banking regulations.

Payward has been exploring ways to enter the European banking sector through Lithuania. Earlier this year, Kraken sought to obtain a European banking license in Lithuania. Acquiring Saldo becomes an alternative path to leveraging its existing operational infrastructure.

Buying Saldo doesn’t only bring regulatory approval. Payward inherits Saldo’s existing deposit products, lending systems, staff, and relationships in various European markets. There’s no need to build everything from scratch.

Of course, this license also has its limitations. Lithuanian Professional Bank can accept deposits, provide loans, and offer payment services, but it does not grant any authority to engage in investment services. Therefore, Kraken’s cryptocurrency, securities, and trading operations will continue to rely on separate regulated entities and licenses. This distinction is crucial, as Payward aims to integrate multiple levels of financial services rather than trying to incorporate all products into a single bank. Its existing infrastructure includes an electronic currency license from Ireland and banking capabilities from the United States. Kraken, on the other hand, provides trading services.

What regulatory obligations come with Saldo?

Having a bank license also means that there are distinct prudential requirements compared to operating an encrypted exchange or electronic currency institution. Shortly before the acquisition announcement, the Lithuanian Central Bank completed the supervisory review and assessment process (SREP) for Saldo Bank. Since October 6th, regulators have set minimum total SREP capital requirements of 10.7%. The minimum ratios for common equity tier 1 and tier 2 capital are 6.02% and 8.03%, respectively. Additionally, Saldo is advised to maintain an additional 1.75% capital in accordance with the second支柱指南.

These requirements mean that Payward must manage capital, liquidity, credit risk, and credit growth effectively while continuing to operate its existing markets and digital assets business.

From an investor’s perspective

The bank license expands Payward’s reach, but it also puts it in a more complex regulatory environment where growth must be supported by regulated balance sheet capacity.

How will Saldo integrate into Payward’s broader strategic framework?

Payward has been working hard to establish connections between encrypted technologies and traditional finance, rather than relying solely on Kraken’s exchange services. Earlier this month, Payward collaborated with Singapore’s Gulf Bank to develop infrastructure that connects fiat payments with digital assets. Additionally, Kraken’s services have expanded to include traditional U.S. stocks, tokenized stocks, payment solutions, and bank card products.

Saldo takes this strategy a step further, as Payward will have its own licensed banking infrastructure, allowing access directly through its own platform, rather than through third-party partners. This could ultimately enable European customers to utilize Payward’s services for deposits, payments, loans, cryptocurrency trading, and other financial products within the Payward group. Of course, all these services will still be subject to separate regulatory requirements and customer eligibility criteria.

The current priority is obtaining regulatory approval for this acquisition. If the transaction is completed as planned in 2027, Payward will move from being “just talking about becoming a bank in Europe” to actually having a real bank, with all the associated balance sheet responsibilities that come with it.