Klarna has asked Utah and the FDIC for permission to become its own US bank, a move that would let one of the biggest buy now, pay later companies stop renting someone else's balance sheet.
That is not a paperwork story.
On July 6, Klarna filed applications with the Utah Department of Financial Institutions and the Federal Deposit Insurance Corporation to charter Klarna Bank USA, a Utah industrial loan company that would be wholly owned by Klarna Inc. If regulators say yes, Klarna gets a much cleaner way to fund US lending and take deposits, instead of leaning so heavily on WebBank, the partner bank it has used to originate loans in the US. Payments, savings, credit and merchant services could all run inside its own walls.
That's the whole pitch. Cut out the middleman bank. Keep the economics.
Klarna picked a real banker to run it. Gary Harding, the former chairman and CEO of Milestone Bank and former president and CEO of Prime Alliance Bank, has been named president and CEO of Klarna Bank USA. He has also served as chief credit officer at TAB Bank and chief risk officer at Rakuten Bank America. Regulators scrutinize the management team behind an industrial bank almost as hard as the balance sheet, and Harding has already worked inside Utah-chartered banking.
The charter is the fight
Utah has quietly become the preferred address for companies that want a bank without becoming a bank holding company. The industrial loan company charter lets a commercial parent, in this case a fintech instead of an automaker, own an FDIC-insured bank while sidestepping Federal Reserve oversight under the Bank Holding Company Act. Utah has leaned into that role. American Banker reported this year that the state granted ILC charters to the captive finance arms of Ford Motor, General Motors and Stellantis.
Klarna isn't the first fintech to try this route. The FDIC approved ILC charters for Square and student loan servicer Nelnet in 2020, and Square's application drew formal opposition from the Independent Community Bankers of America. Affirm has also been chasing an industrial bank charter, filing in Nevada and with the FDIC in January 2026. If you're watching buy now, pay later, don't treat Klarna's filing as a one-company event. This is the lane the whole sector wants.
The ICBA has fought nearly every ILC bid since, including applications from large commercial companies, and the group has pushed Congress for a three-year moratorium on new approvals. Its argument is straightforward: the charter creates a supervisory gap and puts the FDIC's deposit insurance fund behind companies that aren't regulated like ordinary bank holding companies. Klarna should expect that same fight, and possibly a longer one given its size.
Review for a charter like this can run well past a year, with no guaranteed outcome. That puts Klarna Bank USA on a path that likely stretches into 2027, just as the company is trying to convince Wall Street that its public-market numbers add up.
The margin Klarna is chasing
Klarna listed on the NYSE on September 10, 2025, pricing shares at $40 and raising about $1.37 billion. The Associated Press reported that the stock opened at $52, peaked at $57 and closed its first day at $45.82. Business Insider put the IPO valuation at roughly $15.1 billion, a sharp comedown from the $45.6 billion peak Klarna hit in 2021.
The market has been rough since then. In May, the Financial Times reported that Klarna had reached its first break-even quarter since the IPO, with $1 million in net income for the first quarter of 2026, compared with a $99 million loss a year earlier. Revenue rose 44% to about $1 billion, gross merchandise volume reached $33.7 billion and active users rose to 119 million. That is not small. But the same report said the company's stock decline had left it valued near $5.2 billion, and Klarna reserved $186 million for credit losses in the quarter.
Revenue isn't the only issue. Margin is.
Every loan Klarna originates through a partner bank carries someone else's economics and someone else's risk appetite. A wholly owned charter would let Klarna set more of its own underwriting and hold deposits directly - pricing credit without a third party's fingerprints on the transaction. Klarna already operates as a bank in Europe, where it has held a banking license since 2017, and Omni reported, citing the company's July 6 announcement, that the proposed US bank would support payments, savings, credit and other financial services.
Frankly, this is the fight every scaled buy now, pay later platform eventually has to pick. Staying a lending business bolted onto someone else's charter works fine until the volume gets big enough that the rent stops making sense. Klarna is betting Utah and the FDIC will let it stop paying.
Whichever way the FDIC rules, other fintechs will read it as precedent. Affirm and Sezzle are watching the same door - and so is whichever lending app hits enough volume next. A yes for Klarna makes the next application easier. A no tells the sector that the WebBank model may be less temporary than founders like to admit.
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