Paraguay's Central Bank Places Ueno Bank into Resolution Amid Solvency Crisis

Paraguay's central bank voted unanimously on Monday to place Ueno Bank into resolution, transferring its management to officials tasked with assessing the institution's finances and safeguarding its assets. The decision follows the bank's solvency ratio dropping to less than half of the required minimum, prompting regulators to prepare for the transfer of deposits to other banks before liquidating remaining assets.

Ueno Bank reports roughly three million customers, representing about 60% of the country's adult population, and oversees between $800 million and $850 million in public funds, including approximately $380 million from the state pension and health fund. Prosecutors have ordered the arrest of eight individuals, among them President Juan Manuel Gustale and chief executive Federico Miguel Vázquez Villasanti, on suspicion of breach of trust and related offenses, with two additional directors detained later.

President Santiago Peña said he asked central bank chief Carlos Carvallo to resign and reached an agreement with congressional leaders to accelerate legislation that would expedite payouts to depositors and ensure the return of public money. He pledged accountability for those responsible, stating, "Those responsible will have to answer to the courts, without exceptions or privileges."

Customers locked out of the bank's mobile app gathered outside closed branches demanding information about their savings, while police maintained a presence. Most depositors are covered by a central bank insurance fund that guarantees up to $38,000 per person, sufficient to fully protect about 97% of Ueno's depositors.