Paraguay Winds Up Ueno Bank, Parliament to Weigh Impeachment of President Peña
Paraguay's central bank took over Ueno Bank on 3 November and began winding it up. The opposition is pushing to open impeachment proceedings against President Santiago Peña.
Ueno Bank, a fast-growing Paraguayan commercial bank, was shut down in the early hours of 3 November in South America's Paraguay, a country of just over six million people. At about 03:24, the app used by almost three million customers stopped showing accounts and displayed a message saying the balance could not be shown. The Banco Central del Paraguay (BCP), the country's central bank, announced at the same time that the bank had been placed under intervention and that its liquidation had begun. The case has grown into a political crisis, with President Santiago Peña now at its centre.
Why the bank was closed
According to the source, the trigger was a sharp fall in the bank's solvency ratio to below 50%. The banking regulator, the Superintendencia de Bancos, found that the bank could not meet a compulsory reserve of 70 million dollars required by the central bank. Only days earlier, the bank had promoted a capitalisation plan worth 100 million dollars.
The bank held about 850 million dollars in public funds, including money of the Instituto de Previsión Social, the social security body that supports pensions and workers' healthcare. BCP board member Liana Caballero confirmed that the institution was closed and no service was active. Authorities noted that a guarantee fund reimburses each client up to 75 minimum wages, roughly 37,700 dollars, but this did little to ease distrust.
Angry customers gathered outside the head office in Asunción and the bank's 75 branches, hoping to withdraw money. Some begged for access to funds to buy medicine for a gravely ill child or food for their families.
Impeachment move and arrests
At the request of 35 legislators, the Chamber of Deputies will hold an extraordinary session to vote on opening impeachment proceedings against Peña. The move needs 53 votes in the lower house and then two thirds of the Senate. The indictment accuses him of poor performance of his duties, citing conflict of interest, alleged embezzlement of pension funds and shielding the central bank. The opposition accuses BCP leadership of complicity by omission.
On Wednesday the president cancelled his official agenda and later announced online the departure of the central bank's head, calling on the courts to establish responsibility. Eight senior executives of the bank were arrested that day, including chief executive Miguel Vázquez. The Association of Importers and Retailers warned of an immediate 35% drop in sales at major retailers.
Ueno Bank belonged to the influential Grupo Vázquez and sponsored leading football clubs Cerro Porteño and Olimpia, as well as the Defensores del Chaco stadium.
