Paraguay’s central bank seized a major digital lender with close ties to President Santiago Peña on Tuesday, fueling a political crisis and threatening the country’s burgeoning reputation as a regional haven for investors. The buyout left millions of customers’ savings and hundreds of millions of dollars in public funds in limbo, the AP reports. The central bank’s board of directors voted unanimously Monday evening to put Ueno Bank into resolution and hand over its management to officials responsible for assessing its finances and protecting its assets, the regulator announced Tuesday. The move comes after Ueno’s solvency ratio, a measure of its capital relative to its risk-weighted assets, fell below half the legal minimum. The resolution allows regulators to transfer a failing bank’s deposits to other institutions before liquidating its remaining assets.
The bank says it has around 3 million customers, or around 60% of the South American country’s adult population, and manages between $800 million and $850 million in public money. This includes approximately $380 million invested by Paraguay’s state pension and health fund. Prosecutors ordered the arrest of eight people, including Ueno president Juan Manuel Gustale and general manager Federico Miguel Vázquez Villasanti, as part of an investigation into suspected breach of trust and other crimes. By Tuesday afternoon, two more bank directors had been arrested, prosecutors said.
Peña said he had asked central bank chief Carlos Carvallo to resign and agreed with congressional leaders to speed up the legislative process speeding up payments to depositors and guaranteeing the return of public money. He vowed to hold accountable whoever caused the collapse. “Those responsible will have to answer before the courts, without exceptions or privileges,” he wrote on social networks. No longer able to access their accounts on the bank’s app, panicked customers gathered outside closed branches to demand answers about their savings, while police stood guard. Most are protected by deposit insurance. A central bank fund guarantees up to $38,000 per person, enough to fully cover about 97% of Ueno’s depositors.
Gn bussni
