Collapse of large digital bank plunges Paraguay into serious crisis
The collapse of the digital bank Ueno Bank has plunged the South American country of Paraguay into a serious financial and government crisis. Millions of customers can no longer access their money and employees are waiting for outstanding salaries.
60 percent of citizens have no money
The state must now urgently organize the repayment of frozen deposits. At the same time, President Santiago Peña is under criminal suspicion and faces impeachment proceedings because of his ties to the financial institution, the news agency reported AP. Within just a few years, Ueno had risen from a largely unknown financial company to one of the country’s most important banks. According to its own information, the institute had around three million customers, more than 60 percent of the adult population. The state also entrusted the bank with significant resources: most recently, there were around 715 million euros in public deposits there, including money from the state pension and health fund.
The crisis broke out openly on Monday. Central bank employees discovered significant irregularities when checking loans to companies close to the Ueno owners. In addition, expenses were incorrectly recorded as assets. After the balance sheet was corrected, equity fell to less than half of the legally required minimum value. The central bank then took over the institution and initiated its liquidation. The consequences were immediate: the banking app, cards and transfers no longer worked, and branches remained closed. Desperate customers lined up in front of the banks. The central bank wants to transfer deposits and realizable assets to other institutions. A state guarantee fund is intended to compensate affected savers. For around 97 percent of customers, the insured amounts should cover all deposits. However, it takes time for them to get their money.
President under fire
The crisis has now also affected the political leadership. The public prosecutor’s office opened three criminal cases that, among other things, are investigating banking supervision, state deposits and possible misconduct by government officials. Peña is also affected: He held shares in a company that was linked to Ueno until 2025. On Thursday, the president offered his resignation. However, the parliament rejected this so that he would not receive a lifelong senatorship and initiated impeachment proceedings. Peña announced that he would cooperate with investigators. Meanwhile, customers and employees are protesting against the loss of their savings and jobs. According to the Ministry of Labor, around 7,000 jobs are directly or indirectly affected.
