Paraguay's central bank liquidates Ueno Bank, which held 850 million dollars of public funds
Victoria Shinder1 min readThe Central Bank of Paraguay took over Ueno Bank in the early hours of 3 November and began liquidating it, Euronews reports. The bank had almost three million customers, had grown rapidly in its three years of existence and played a key role in managing state funds. According to the report, the resolution procedure was triggered after its solvency ratio was found to have fallen below 50%.
The bank's app stopped showing balances at around 03:24 that morning, and the central bank closed all services, including cards. A board member of the central bank, Liana Caballero, confirmed at a press conference that neither the app, the cards nor any other service would work. Customers gathered outside the head office in Asunción and the 75 branches. Euronews reports that Ueno held around 850 million dollars in public funds, including money of the Social Security Institute, which funds pensions and healthcare. The legal deposit guarantee covers each client up to 75 minimum wages, about 228 million guaraníes or 37,700 dollars.
The failure turned into a political crisis. At the request of 35 lawmakers, the Chamber of Deputies was due to vote in an extraordinary session on opening impeachment proceedings against President Santiago Peña, accused of poor performance of his duties among other charges; according to Euronews he resigned beforehand. The opposition also accuses the central bank leadership of failing to act in time.
What it means
A bank that held state pension money and collapsed within three years of opening is a supervision failure before it is a market event. The guarantee cap leaves larger depositors and the public institutions themselves exposed, and that is what turned a bank resolution into a change of government.