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Klarna Signs Major Facility with Santander
Klarna has secured a €1.4 billion (US$1.6 billion) warehouse financing facility with Santander, marking its first such arrangement in Germany and its second significant funding initiative in the space of a month.
The facility is backed by Klarna’s receivables portfolio in Germany, where the company has operated since 2010. The structure allows the Swedish fintech to raise capital against future customer payments, providing flexibility as it continues to grow.
Santander is serving as the sole lender. While the Spanish bank also competes with Klarna in Germany through its Zinia buy now, pay later service, it has now become a funding partner, reflecting the broader convergence between traditional banks and fintech operators.
Klarna’s Chief Financial Officer, Niclas Neglén, described the facility as a cornerstone of the company’s funding strategy. He said it adds resilience to Klarna’s balance sheet and demonstrates confidence in the firm’s performance and risk management.
Follows Nelnet Agreement in the U.S.
The Santander deal comes shortly after Klarna reached a US$26 billion forward flow financing agreement with Nelnet in the United States. Under that arrangement, Klarna transfers newly originated “Pay-in-4” receivables to Nelnet, which has extensive experience in loan servicing.
Together, the two transactions highlight Klarna’s effort to diversify funding sources while addressing capital needs in two of its largest markets. The strategy provides liquidity, reduces balance sheet risk, and offers flexibility to focus on product development and expansion.
Quarterly Results Reveal Challenges
Klarna’s latest financing moves arrive against a backdrop of mixed financial performance. The company reported a net loss of US$53 million for the three months ending June, widening from an $18 million loss a year earlier.
Revenues, however, rose 21 percent to $823 million, underscoring continued demand for its services. Klarna’s management pointed to growth in the United States as a key driver, with new merchant partnerships and a growing user base.
Chief Executive Officer Sebastian Siemiatkowski emphasized that credit performance remained strong. He noted that global delinquency rates on BNPL loans fell to 0.89 percent, down from 1.03 percent a year earlier, while realized losses edged down to 0.45 percent of volume.
Cost Reductions and Provisions
The quarterly loss was partly driven by a $24 million charge linked to office space reductions, as Klarna continues to streamline operations. The company has cut staff and deployed artificial intelligence tools to lower costs and increase efficiency.
At the same time, Klarna increased provisions for potential credit losses to $174 million, up from $106 million a year earlier. Executives explained that the rise reflects both rapid lending growth and a shift toward longer-term, interest-bearing products, which carry higher risk than traditional instalment loans.
Pivot Toward Broader Banking Services
Klarna, once best known for interest-free BNPL instalments, is expanding its model to resemble a digital bank. It now offers debit cards, bank accounts, and interest-bearing loans.
The company’s newer loan book more than doubled year on year and now makes up 8 percent of its total volume. Management views this as a way to secure recurring revenues and reduce reliance on retail partnerships.
This pivot is particularly important in the United States, where Klarna faces competition from Affirm, PayPal, and credit card providers. By presenting itself as a more comprehensive financial services platform, Klarna hopes to strengthen both its customer relationships and investor appeal.
IPO Plans Back on Track
Klarna has revived plans for a New York listing, aiming for the autumn. The company had previously paused its IPO ambitions in April due to market volatility linked to new U.S. trade tariffs.
Management now sees renewed investor appetite following successful technology listings, including Figma and Bullish, both of which surged after their debuts. Bankers involved in the process suggest Klarna will seek a valuation above the $15 billion level floated last year, though well below the $45 billion peak reached in 2021.
Even so, a listing at that level would represent a recovery from its $6.7 billion low point in 2022, when higher interest rates and regulatory scrutiny weighed heavily on BNPL providers.
Investor reception to Klarna’s latest quarterly results will be closely watched as a barometer for IPO sentiment. While losses have widened, revenue growth and strong credit performance may reassure potential buyers.
Funding Strength as IPO Catalyst
The facility with Santander strengthens Klarna’s position as it approaches the public markets. By securing long-term financing from a major European bank, alongside the U.S. agreement with Nelnet, Klarna has diversified its capital base and reduced reliance on short-term funding.
These moves are likely to be seen by investors as evidence of careful preparation for life as a listed company. They also demonstrate Klarna’s ability to balance expansion with funding discipline at a time when scrutiny of fintech lending remains high.
Outlook
Klarna’s path toward an IPO is unfolding as the BNPL sector faces both opportunities and risks. Global adoption continues to rise, yet regulators are calling for closer oversight of instalment lending.
For Klarna, success will depend on sustaining growth in core markets, managing credit risk as its loan products evolve, and maintaining consumer trust. With €1.4 billion in new capacity from Santander, a US$26 billion U.S. agreement with Nelnet, and a diversified product suite, the company is seeking to show it can manage both scale and stability.
