ASUNCIÓN, Paraguay (AP) — 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 takeover left millions of customers’ savings and hundreds of millions of dollars in public funds in limbo.
The central bank’s board voted unanimously late Monday to put Ueno Bank into resolution and hand its management to officials charged with assessing its finances and protecting its assets, the regulator said Tuesday. The move came after Ueno’s solvency ratio, a measure of its capital against its risk-weighted assets, fell below half the legal minimum. Resolution allows regulators to transfer a failing bank’s deposits to other institutions before liquidating its remaining assets.
The bank says it has about 3 million customers, equivalent to roughly 60% of the adult population of the South American country, and manages $800 million to $850 million in public money. That includes about $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 chief executive Federico Miguel Vázquez Villasanti, as part of an investigation into suspected breach of trust and other offenses. By Tuesday afternoon, another two bank directors had been taken into custody, prosecutors said.
Peña, who canceled a planned trip to an international summit in Spain late Monday, said that he had asked central bank chief Carlos Carvallo to resign and had agreed with congressional leaders to fast-track legislation expediting payouts to depositors and guaranteeing the return of public money. He vowed to hold whoever was behind the collapse accountable.
