BC of Paraguay says it has returned money to 1.2 million Ueno Bank customers

The Central Bank of Paraguay announced this Saturday (7) that it had returned money to 1.2 million customers of Ueno Bank, a digital bank involved in a solvency crisis last week.

According to information presented by the interim president of the country's Central Bank, Pedro Acosta, and the president of the FGD (Deposit Guarantee Fund), José Maciel, at a press conference, payments already total R$880 million (or US$160 million).

The number of customers who received the amounts corresponds to 41% of the total number of customers the institution had (2.9 million). Paraguay has around 7 million inhabitants.

Acosta explained that, on the first day of transfers, on Thursday (5), customers who had up to R$8,800 deposited in Ueno were served. In the second stage, payments were made to those who had amounts between R$8,800 and R$200,800 in their accounts, the maximum limit covered by the Deposit Guarantee Fund.

A large part of the payments is covered by the fund. According to the local Central Bank, the mechanism has the capacity to cover the deposits of 97% of the bank's customers.

Anyone with deposits above this limit will have to wait for the final balance prepared by the Superintendence of Banks, which will assess the extent to which it will be possible to cover the excess amounts.

The collapse of Ueno Bank led Paraguay to an institutional crisis. The former president of Paraguay Santiago Peña was arrested on Friday (6), hours after the approval of his impeachment by Congress, which removed him from office, due to his relationship with the institution.

Peña is a former investor in the bank's holding company and was responsible for appointing, in 2023, Carlos Carvallo, then executive president of the company, to the presidency of the Central Bank of Paraguay. Carvallo resigned from his position this week and also had an arrest warrant issued on Friday.

The Ueno Bank crisis worsened after the institution's solvency index, an indicator that measures its ability to absorb losses, fell to 5.56%, less than half of the minimum regulatory requirement in the country, of 12%.

A series of investigations identified problems in credit risk assessment, inconsistencies in the financial information used to approve loans and transactions with companies related to the bank's shareholders.

According to the then president of the Central Bank, Carlos Carvallo, the investigations also identified loans granted to companies linked to the institution's controlling group.

The bank also manages more than US$850 million (around R$4.7 billion) in public resources, including amounts from the Social Security Institute, responsible for the state pension system.