Ueno Bank crisis in Paraguay: 2.9 million customers locked out and impeachment bid against Peña
Paraguay's Central Bank intervened in Ueno Bank over solvency problems, leaving millions of customers without access to their accounts and triggering a political scandal.
Ueno Bank collapse shakes Paraguay: savers in the street and 27 charged
According to cnnespanol.cnn.com, Paraguay's Central Bank (BCP) intervened in Ueno Bank over solvency problems, leaving 2.9 million customers without access to their accounts and triggering a crisis that led to a call for impeachment proceedings against President Santiago Peña and the resignation of BCP chief Carlos Carvallo.
The intervention took place in recent days and included the immediate closure of operations. The entire board of the entity was detained. The Public Prosecutor's Office charged 27 people linked to Ueno Bank and other companies in the group with alleged breach of trust and other economic crimes.
Public funds trapped and mass protests
The epicentre of the scandal is the state resources trapped in the entity. Approximately 380 million dollars from the Social Security Institute (IPS)—which includes deposits from approximately 32,000 retirees—remain locked in Ueno Bank, along with funds from the National Electricity Administration (ANDE) and from the binational Itaipú dam.
The situation sparked mass protests in central Asunción. Protesters claimed they had suffered "a hit to the pocket" and demanded the impeachment of President Peña and his Vice-President Pedro Alliana. The demonstrations began peacefully, but a group attempted to advance towards the National Congress building and was stopped by police, with confrontations and running clashes.
Paraguayan journalist Samuel Acosta summarised public sentiment in comments reported by the media: "People are asking for Santiago Peña to be detained and sent to prison."
Workers affected in Paraguay and Argentina
The employment impact reaches both direct bank employees and workers from associated companies. The preliminary count includes 490 active bank workers and thousands of employees from outsourced firms. Paraguay's Labour Minister Mónica Recalde confirmed the implementation of a support scheme for employees linked to the entity and to subcontracted companies.
The crisis also hit around 1,000 workers in Argentina. The companies Itti and Kaitel, which operated from Buenos Aires and managed the digital operations of Ueno Bank's banking sector, stopped paying salaries without explanation. "The bosses stopped responding to employees, Human Resources doesn't answer, they didn't pay last month's wages and there's no communication about severance settlement," Acosta said, citing complaints from the workers themselves.
Argentine employees did not receive pay for October and currently have no information about the fate of their severance. In Paraguay, the bank liquidation process is proceeding through BCP intervention.
Customers without cash and the deposit guarantee fund limit
Students, workers, small business owners and retirees found their accounts blocked from one day to the next. A student recounted to Paraguay's La Nación newspaper how she experienced the moment: "I had money there for everyday expenses, for my university costs and to buy snacks. Yesterday I woke up and the app wasn't working. Then I found out from the newspapers that the bank no longer existed. Since I don't use much cash and only had that account, I had to borrow money."
Paraguayan law provides for a Deposit Guarantee Fund coverage of up to 75 minimum monthly wages per natural or legal person at each financial entity. That limit currently equals 228.3 million guaraníes, approximately 38,000 dollars.
Government measures and state of investigations
The Paraguayan government passed a law modifying banking legislation to speed up the delivery of resources to depositors of entities undergoing resolution. Under the new regulations, the BCP will be able to execute disbursements immediately to savers.
The investigations focus on alleged manipulation involving loans to linked companies, possible irregularities in fund management and the responsibility of the entity's principal executives. Detentions were made and precautionary measures were requested against several of those charged.
The Ueno Bank crisis transcended the financial sphere and led to a formal call for impeachment proceedings against Peña, while the concern of savers over the fate of their deposits continues to grow.
Source: Google News CL — Santiago