Paraguay closes Ueno Bank as solvency falls below 50%

The Central Bank of Paraguay placed Ueno Bank under intervention and opened its liquidation process on Tuesday 3 November, after the lender’s solvency ratio fell below 50 percent. Customers lost access to their accounts. Board member Liana Caballero said the institution had been closed and that neither the app, nor the cards, nor any service was active.

Public funds at risk

The bank held about 850 million US dollars in public funds, including money belonging to the Social Security Institute. Ueno Bank had about 3 million customers and 75 branches across the country. The central bank said the guarantee fund would reimburse each client up to 75 minimum wages, equal to about 228 million guaraníes or roughly 37,700 US dollars.

The bank had recently touted a 100 million dollar capitalisation plan. It could not meet a statutory reserve requirement of 70 million dollars.

Political fallout

The chamber of deputies was due to consider impeachment proceedings against President Santiago Peña the following day. Thirty-five legislators asked for the extraordinary session. Impeachment would require 53 votes in the lower house.

Peña cancelled official engagements and later announced the departure of the head of the central bank. Eight senior executives, including the chief executive, were arrested on Wednesday. The Association of Importers and Retailers warned of a 35 percent slump in sales at major retailers.

Also Read

ECB keeps all three key rates unchanged at 2.50% deposit rate

ECB’s Wunsch says rates probably must rise again

ECB banks tighten euro area lending standards in third quarter

Most analysts see Colombia rate rising to 12.50 percent

Potanin says lack of investment biggest challenge for Russian economy

Related: Paraguay's central bank moves to resolve Ueno Bank

Source: Central Bank of Paraguay