- Saldo returned to profit in 2025 as deposits and lending expanded.
- Loan impairment charges absorbed most pre-impairment operating profit.
- Payward may need additional capital to support its European lending plans.
Kraken’s parent company Payward is preparing to enter European banking through its acquisition of Saldo Bank, but the Lithuanian lender’s financial statements show that the transaction involves more than securing a banking licence.
Saldo has expanded its deposit base, increased lending and returned to profitability. At the same time, overdue loans have risen sharply, and its regulatory capital ratios have declined as the business has grown.
These developments create an immediate question for Payward: how much additional capital and credit-risk capacity will be needed to turn a relatively small European lender into a broader financial services platform?
Payward announced a definitive agreement on October 14 to acquire Saldo Finance Oy, the Finnish holding company behind Saldo Bank UAB. The purchase price was not disclosed, and completion is expected in 2027, subject to regulatory approval.
The transaction would be the first acquisition of a European bank by a digital-asset company, according to the Financial Times.
Saldo’s Accounts Show Growth With Uneven Credit Quality
Saldo’s 2025 financial statements, dated April 3, 2026, provide a clearer picture of the business Payward intends to acquire.
The bank reported improvements in several financial measures, although credit quality and capital ratios moved in the opposite direction.
Saldo Bank’s financial position, 2024 versus 2025:
- Total assets: €133.57 million → €162.91 million
- Retail deposits: €110.03 million → €136.91 million
- Net result: €2.39 million loss → €962,000 profit
- Loans overdue by at least 90 days: €1.62 million → €3.51 million
- CET1 capital ratio: 19.0% → 14.9%
The deposit expansion is significant. Customer funding increased by approximately 24.4%, outpacing the 18.5% growth in the bank’s gross credit portfolio.
That provides a larger funding base for lending activities, although deposits also create interest expenses and obligations to customers.
Profitability improved substantially. Operating profit before impairment losses rose by approximately 54% to €10.4 million, while net interest income and fee revenue also increased.
Credit costs remained the principal constraint on earnings.
Saldo recorded €9.36 million in impairment charges, equivalent to roughly 90% of its pre-impairment operating profit.
This does not mean that 90% of its loans were impaired. The comparison measures the annual expense recognized for credit losses against earnings before those charges.
Impairment expenses increased only modestly from 2024, helping explain why the bank moved from a loss to a profit despite the substantial charge.
Overdue Loans Present a Different Risk Signal
The deterioration in late-stage arrears is more pronounced than the change in annual impairment expenses.
Loans overdue by at least 90 days increased approximately 118% during 2025, compared with growth of less than 20% in the gross loan portfolio.
As a share of gross loans, these severely overdue balances rose from approximately 1.5% to 2.8%.
The figures suggest that a larger proportion of the portfolio was experiencing serious repayment delays at year-end.
However, overdue balances should not be treated as identical to the bank’s entire non-performing exposure, which may also reflect other indicators of borrower distress.
There is also a counterbalancing development in the accounts. Saldo’s overall impairment allowance coverage of its gross credit portfolio declined slightly from 8.62% to 8.31%.
The bank’s management described asset quality as resilient and reported no breaches of prudential capital requirements during 2025.
These disclosures do not establish an immediate financial problem. They do indicate that Payward will inherit a lending business whose future profitability depends partly on how successfully it controls defaults and recoveries.
That challenge becomes more consequential if the buyer intends to accelerate loan growth.
A Banking Licence Does Not Eliminate Capital Constraints
Saldo’s Common Equity Tier 1 ratio declined by 4.1 percentage points in 2025, while its total capital ratio fell from 25.4% to 19.8%.
Both remained above the bank’s applicable capital targets.
The decline nevertheless illustrates a central constraint of banking expansion: increasing lending can raise risk-weighted assets and reduce capital ratios unless the institution generates or receives sufficient additional capital.
Payward has not disclosed how much it will pay for Saldo or whether it plans to inject fresh capital after the acquisition.
That leaves two separate financial commitments unresolved: the purchase price and the funding required to expand the acquired bank.
The distinction matters because Payward’s existing lending activity does not automatically translate into capital available to support Saldo’s balance sheet.
Payward says its banking business has originated more than $2 billion in loans. That cumulative figure measures lending activity over time, not the amount of outstanding credit or regulatory capital available to the Lithuanian institution.
Saldo’s existing licence and operational infrastructure may reduce the time needed to enter European banking, but they do not remove the balance-sheet requirements associated with growth.
Crypto-Backed Lending Would Add Another Layer of Complexity
Payward wants to connect conventional banking with cryptocurrencies, tokenized equities and credit products.
Co-CEO Arjun Sethi has described a broader strategy built around controlling the financial relationship with customers.
In the company’s announcement, he argued that whoever owns that relationship gains the opportunity to provide the services surrounding it.
Saldo offers a route toward that objective through existing deposit products, consumer and business lending, card issuance and embedded banking infrastructure.
Crypto-backed credit, however, would introduce risks different from those already reflected in Saldo’s financial statements.
Digital assets can experience sharp price movements outside conventional banking hours. A lender accepting them as collateral would need appropriate valuation methods, collateral requirements, liquidation arrangements and legal control over pledged assets.
The European prudential treatment would also depend on the structure of the exposure and whether the collateral qualifies for recognition under applicable banking rules.
Separately, Lithuania’s specialized banking authorization does not permit investment services without the appropriate additional permissions.
These constraints make the proposed integration more complicated than combining Kraken’s existing products under a single banking brand.
No specific crypto-backed lending product through Saldo has been confirmed.
The Acquisition’s Economics Remain Unproven
Payward is buying a functioning European lender rather than applying for a banking licence and building its operations from the beginning.
Saldo already serves customers across Lithuania, Finland, Sweden and Germany, with additional regulatory passporting into the Netherlands. Its embedded lending operations also give Payward potential access to fintech customers beyond Kraken’s existing user base.
Those capabilities could support a broader financial services business, particularly if Payward can distribute banking products through its established platforms.
Yet the acquisition’s financial attractiveness cannot be assessed without a purchase price, a post-acquisition capital plan and clearer information about expected revenue.
Saldo’s latest accounts offer a useful baseline. The bank has demonstrated that it can grow deposits and lending while reaching profitability, but credit losses continue to absorb a substantial share of operating earnings.
For Payward, the challenge after regulatory approval will be to expand that business without allowing credit deterioration or capital requirements to undermine the returns from its European banking strategy.
The licence provides market access. The acquired balance sheet will determine how much that access ultimately costs.
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