Paraguay takes over Ueno Bank amid depositor crisis

Paraguay's Central Bank took control of Ueno Bank on November 3, saying the major lender had a severe capital shortfall and that the intervention was needed to protect depositors and financial stability.

Ueno says it has more than three million customers, close to half of Paraguay's population, and manages millions of dollars in pensions and other state funds. In Asuncion, long lines formed as people tried to withdraw money from branches.

The Central Bank said account holders would receive a first payment of up to 10 million guaranis, or about $1,600, from a deposit guarantee fund.

Arrest warrants were issued for eight top executives, including Ueno president Miguel Vazquez, who surrendered to police.

President Santiago Pena owned shares in a group that controlled Ueno Bank until last year, when he sold them. Opposition senator Rafael Filizzola said opponents were drafting a motion on impeaching Pena over allegations that he channelled public resources into the bank and relaxed anti-corruption laws.

Pena cancelled a planned trip to Madrid for the Ibero-American Summit. At his request, Central Bank president Carlos Carvallo, who previously chaired Ueno Bank, resigned.

The Paraguayan Banking Association said the wider banking system maintained its stability, solvency and liquidity.