Banco Ueno’s collapse has frozen funds used by Paraguay’s volunteer firefighters, social security institute, and state-owned electricity provider. (Foto: Instagram)
The collapse of Banco Ueno, Paraguay’s largest digital bank, has left thousands of customers unable to access their deposits and placed funds linked to public services in limbo. The fallout has included the removal of President Santiago Peña, who is under criminal investigation over alleged involvement in the financial scandal. The effects on public services could grow as institutions seek to recover money held at the bank.
Paraguay’s central bank dissolved Banco Ueno on Tuesday, Nov. 3, after finding that its solvency had fallen to less than half the required level. The bank had 2.9 million customers, about 40% of Paraguay’s population. The Public Ministry accuses the company of manipulating the bank’s financial position to make its operations appear credible and of directing loans and other financing to companies connected to the bank’s controlling group. The allegations have not been presented as proven findings.
The Paraguayan Volunteer Firefighters Corps has already reported operational effects. Firefighters in the country are volunteers, not public employees. The Itá fire station had only one vehicle in service on Friday, Nov. 6, according to the Paraguayan newspaper ABC. The national firefighters’ directorate said about 2 billion guaraníes—approximately $313,000—raised in the organization’s most recent fundraising drive were frozen at Banco Ueno, along with funds belonging to individual fire stations. It warned that the situation could undermine stations’ operating capacity and the continuity of emergency services. The organization is seeking assurances that the money will be protected from any process that could delay or restrict its availability.
The Paraguayan Social Security Institute said it had about $355 million deposited at the bank, equal to 9% of the government’s pension fund. The institute said the crisis would not prevent it from paying retirees and pensioners. Board member Mirtha Arias sought to allay concerns, saying payments would be made in full on Nov. 17. The institute is pursuing the frozen funds through the central bank and has filed documents to support the protection of the money. It also said it was working to move the accounts of 32,000 retirees who received payments through Banco Ueno to other banks.
The National Electricity Administration, Paraguay’s state-owned power provider, also held funds at Banco Ueno. Its president, Miguel Baéz, told Paraguayan media that the agency had deposits tied to loans from the Inter-American Development Bank and Taiwan. The utility has asked the central bank to give its funds special treatment. Baéz also said the bank’s troubles could affect electricity payments because some utility customers use Banco Ueno’s apps to pay their bills.
The crisis has prompted further changes in government. Congress removed Peña after the Chamber of Deputies opened impeachment proceedings unanimously on Thursday and the Senate voted for his ouster on Friday, Nov. 6. Peña had been a shareholder in the bank’s controlling group until last year. He is also being investigated over alleged involvement in the scandal. The National Police detained him at his home in Asunción on Friday night, according to the report. Vice President Pedro Alliana, a member of the same Colorado Party, was expected to take over. Javier Giménez, Peña’s chief of staff, and presidential legal adviser Roberto Moreno also left their posts Friday. Central Bank director Carlos Cavallo resigned Wednesday, and Interior Minister Enrique Riera resigned Thursday.
