Central Bank of Paraguay intervenes in Ueno Bank and places digital institution under resolution regime

The Central Bank of Paraguay intervened in Ueno Bank on Tuesday (3), placing one of the country's largest digital institutions under resolution. According to Times Brasil, citing the Associated Press, the BC board unanimously decided on the measure on Monday night (2).

Ueno is considered one of the largest digital banks in the country and is linked to President Santiago Peña. Due to this link, the case tends to gain repercussions that go beyond the financial sector, even without the facts established indicating any political development.

The trigger for the intervention was the bank's solvency ratio, which was below half the minimum required by law. This indicator compares the institution's capital with the risks of its assets, that is, it shows how much margin the company has to absorb losses.

In practice, the resolution regime allows deposits to be transferred to other banks before the rest of the company is liquidated. The measure separates what can be preserved from what will be closed, and the procedure chosen by the regulator seeks to organize this separation before any definitive decision about the company.

The case also draws attention because it involves a digital bank, a fast-growing model in several markets in the region. When solvency drops to this level, supervision becomes the main instrument to prevent problems at one institution from spreading to the rest of the system.

What changes for the investor

For those who follow interest rates, exchange rates and the stock market, the episode reinforces that a bank's solvency depends on the relationship between its capital and the risks it takes. A case of this type could increase caution with digital institutions and Paraguayan assets in general, but the facts discovered do not provide data on effects on prices or quotations. The next steps in the resolution process and any announcements from the Central Bank of Paraguay are the points to monitor before reaching any conclusion about the sector.

Automatically translated from Portuguese.