$800 million of public money is frozen inside Ueno Bank
The central bank has taken control after Ueno's capital fell below a critical legal threshold. Deposit insurance is expected to cover most customers, but more than $800 million in public money is also tied up.
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Nov 4, 12:00 UTC ·
852 words
Paraguay's central bank has taken control of Ueno Bank and frozen its assets and liabilities, cutting off about three million customers from their accounts as officials assess its finances. [1][3]
The central bank's board voted unanimously to put Ueno into resolution, a process that transfers control to officials who must assess what the bank owns and owes, protect its assets and decide how to handle deposits. Its solvency ratio, which measures its capital against assets adjusted for their risk, had fallen below half the legal minimum. [1][3]
Ueno's app, cards and other services stopped working. On Tuesday, customers could neither withdraw nor transfer money, and people gathered outside shuttered branches seeking answers. The bank says its customer base amounts to roughly 60% of Paraguay's adult population. [1][2][3]
The freeze also reaches deep into public finances. Ueno holds about $800 million to $850 million in public funds, including roughly $380 million invested by the Instituto de Previsión Social, the agency responsible for public pensions and healthcare. [1][3]
"This really tarnishes the country's name," one depositor told The Associated Press. [3]
What customers can recover
Paraguay's deposit guarantee covers up to 228.3 million guaraníes, about $38,000, per depositor at Ueno. Preliminary estimates put about 97% of its depositors within that limit, according to AP. For most customers, that offers a route to getting their money back, though it does not restore access to an account today. [3]
The legal timetable requires covered deposits to be paid within 15 days, with one possible extension of another 15 days. The central bank said customers would soon receive an initial payment of up to 10 million guaraníes, about $1,700, after subtracting any debts they owe Ueno. It gave no payment date. [1][3]
That initial payment is much smaller than the full insurance ceiling. A customer whose savings are fully covered may therefore still have to wait for the rest. And the estimated 97% coverage describes the share of depositors protected in full, not the share of all money held at the bank. [3]
For balances above the guarantee limit, the central bank said it would seek the greatest possible protection. It has not publicly established Ueno's total losses, the amount recoverable for uninsured depositors or the resolution route it will take, such as transferring deposits or selling assets. [3]
The pension and health agency said pensions would continue to be paid as usual. It is moving about 32,000 retirees who collect their payments through Ueno to another bank and plans legal action to recover its investment. Continuing pension payments and recovering the agency's money are separate tasks. [2][3]
The bank said public funds accounted for about a quarter of its deposits. The crisis therefore leaves the government dealing with two immediate problems: restoring access to household savings and protecting money held on behalf of the public. [3]
A capital failure, not a loss tally
The trigger for intervention was Ueno's solvency ratio, which measures the bank's capital against assets adjusted for their risk. Capital provides a cushion against losses. Falling below half the legal minimum means that cushion was far short of what the rules required.
It does not mean half of customers' deposits have disappeared. [3]
Central bank President Carlos Carvallo said the regulator's investigation had found loans to companies connected to Ueno's owners. According to UPI, supervisors ordered Ueno in June to bring related loans within legal limits, and later accounting adjustments exposed a capital shortfall. [1][2]
Lending to businesses connected to a bank's owners makes the relationship between borrower and lender a central concern for supervisors. Here, Carvallo's account and the reported June order put those loans at the centre of the regulatory investigation. Neither establishes the final loss on them. [1][2]
On the evening before the takeover, Ueno said it was operating normally and had received no notification that the deposit guarantee fund would be activated. The intervention then replaced its management with officials charged with assessing its finances and protecting its assets. [1][2]
Carvallo described the failure as an isolated event and said Paraguay's financial system remained sound and healthy. That is the central bank president's assurance about the wider system, rather than an independent finding about Ueno's finances. [1]
Investigations reach the bank's leadership
Prosecutors have opened a separate criminal investigation. AP reported that they ordered the arrest of eight people, including Ueno's president and chief executive, over suspected breach of trust and other offences. Prosecutors said two more bank directors were in custody by Tuesday afternoon.
The allegations and arrests are not findings of guilt. [3]
The intervention also puts the regulator's leadership under pressure. Carvallo previously led Ueno's predecessor before President Santiago Peña appointed him to head the central bank. Carvallo said he had signed his resignation but would remain temporarily to oversee the resolution. [1][2][3]
Peña said he had asked Carvallo to resign. AP also reported that the president remained a business partner of Ueno's owner until March 2025. Those ties make scrutiny of the bank's supervision unavoidable, without establishing wrongdoing by either official. [3]
"Those responsible will have to answer to the courts, without exceptions or privileges," Peña wrote. He said he had agreed with congressional leaders to fast-track legislation addressing depositor payouts and public money. [3]
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