Australia’s biggest bank wages pay-later war with $300m stake in Klarna

The Commonwealth Bank of Australia (CBA) has increased its stake in pay-later giant Klarna to jointly fund the fintech’s expansion across the Australian and New Zealand markets.

The CBA has invested an additional $200m on top of the $100m it already invested in Klarna last year.

This also makes the CBA one of Klarna’s largest minority shareholders with a 5.5% stake in the business.

The CBA will also own 50% of Klarna’s Australian and New Zealand arm, with an option to partner with Klarna in Indonesia.

Read more:How Klarna became Europe’s largest fintech?

Pay-later services are a lucrative market in Australia and New Zealand, where Afterpay (the parent of pay-later brand Clearpay) and Laybuy have been going head-to-head for supremacy while both expanding globally.

Last month Klarna hired Francine Ereira from Australian credit rival Zip to lead the Swedish fintech’s growth across the region.

The CBA’s decision to build a $300m stake in Klarna and jointly finance its Australian business highlights the opportunity Klarna’s arrival poses for the incumbent bank to disrupt what could otherwise become a duopoly between Afterpay and Laybuy.

In Europe and North America Klarna struck a similar arrangement with retailer H&M, which the fintech used as a launchpad to expand into the US and onto UK high streets.