Greek fintech Viva Wallet is planning to raise as much as €500m ($590m) to set up its digital banking operations, Reuters has reported.

The payments company has hired an investment bank, Jefferies, to advise on the fundraising.

Viva will use the fresh funds to offer stakes in a new legal entity. The new venture will acquire Viva Wallet’s banking loans, the report added citing sources.

Viva CEO Haris Karonis intends to sell the company’s loan books to a special purpose vehicle (SPV) to remove the risk from its balance sheets.

One of the sources was quoted by Reuter as saying: “Viva wants to be a neobank without a loan book.”

The report comes eight months after Viva acquired Greece’s first digital challenger Praxia Bank and obtained a banking license from Bank of Greece.

A successful capital raise may provide startup banks in Europe with a new way to manage their loan books.

The Athens-based payments fintech offers payment services in the cloud across 23 European countries and in three currencies; the euro, British pound, and Romanian leu.

European Investors are increasingly funding the neobanks in the region as they grow popular. In May, Germany’s N26 had secured $570m in total fundraising.

However, some neobanks such as Monzo are struggling to raise capital due to the ongoing Covid-19 pandemic.