Paraguay Begins Ueno Bank Resolution After Solvency Ratio Falls Below 50% of Legal Minimum

Key Facts

Paraguay’s central bank began a resolution process for Ueno Bank on November 2, 2026, after its solvency ratio fell below 50% of the required minimum, according to a council statement approving the decision unanimously. The central bank said the decline emerged from adjustments made to financial data during the resolution process. The measure aims to protect depositors and preserve financial-system stability, the statement said. The central bank described the case as specific to Ueno, saying it “does not represent a general condition of Paraguay’s financial system.” The move places the bank under direct regulatory supervision as its financial position, assets and liabilities are assessed.

According to the statement opening the process, regulatory concerns began after loans linked to companies affiliated with the group controlling the bank were discovered. On June 5, the central bank asked Ueno to adjust these transactions to ensure compliance with legal limits. The statement said liquidity indicators deteriorated afterward and the bank needed to set aside additional provisions. The central bank said these factors together contributed to the start of the resolution, without identifying the liquidity crisis as the decision’s direct stated cause. Central bank President Carlos Carvallo said regulators initially raised concerns about Ueno’s loans to companies linked to the bank’s owners, and that a deeper review uncovered more serious violations that would be reported to the relevant authorities.

Ueno says it has about 3 million customers, equivalent to nearly 60% of Paraguay’s adult population. The bank also said it manages between 800 and 850 million dollars in public funds, including about 380 million dollars invested by the government pension and health fund IPS, according to the fund. These figures give the resolution process direct significance for a broad segment of customers and public institutions as supervisors begin verifying the bank’s financial position. The central bank said the banking supervision authority would appoint officials to verify the financial position as of the decision date, protect assets and carry out resolution procedures. Resolution allows regulators to transfer deposits from a failing bank to more stable banks before liquidating remaining assets to repay creditors, according to the Associated Press.

The deposit guarantee limit is 75 monthly minimum wages per depositor at each institution, equivalent to 228.300.000 guaraníes, according to the central bank. The limit is calculated per depositor and per institution, not per account. The central bank said arrangements for recovering covered deposits would be announced later, and also pledged to pay pensions on their usual dates. According to the Associated Press, the law requires guaranteed deposits to be paid within 15 days, with the deadline extendable once by an additional 15 days. For balances above the guarantee, the central bank says the resolution procedures will include settling assets and liabilities in an effort to protect as much as possible; recovery depends on the outcome of the process and the possibility of liquidation, and the bank has not provided a full guarantee for them.

Days before the decision, Ueno announced a 100 million dollar capital plan on October 29, including a planned 50 million dollar contribution from the controlling shareholder in November and a new share offering of the same value to investors in Paraguay. The bank said full implementation of the plan would raise its Tier 1 capital ratio from 11.7% to 14.9%, above the regulatory minimum of 8%, and lift its total regulatory capital ratio from 13.8% to 15.9%, against a 12% minimum. The company expected to complete the share offering within 60 days of announcing the plan, subject to the necessary regulatory approvals. The timing shows that the capital-raising plan preceded the start of the resolution by a short interval, as the bank’s management and financial position came under review by supervisors. Resolution allows deposits to be transferred to more stable banks before the remaining assets are handled, according to the description cited by the Associated Press.

The central bank said its staff are bound by legal confidentiality requirements regarding financial institutions’ operations, reports submitted to it and customer data. In the statement opening the process, it added that the publication of sensitive information during the review “contributed to accelerating the institution’s liquidity deterioration” and impaired its ability to meet obligations. It also said the investigation uncovered possible fraudulent conduct that would be referred to the relevant authorities. On the handling of the case, central bank President Carlos Carvallo said he had submitted his resignation but would remain temporarily to ensure the process stays “on the right track,” adding that his departure could reduce the noise surrounding the case. The central bank’s oversight of Ueno had faced scrutiny in previous months after senators called for senior officials to be dismissed following their rejection of a report they considered incomplete.

Regarding the government fund’s money, Gladys Vera, IPS’s financial director, said the fund would take legal action in an attempt to recover its investment and seek another bank to pay pensions to 32,000 retirees who receive them through Ueno. She added that retirees would receive their pensions as usual this month because the funds for monthly payments are deposited at another bank. The handling of balances not covered by the deposit guarantee remains tied to the outcome of the resolution and the possibility of liquidating remaining assets. The central bank said supervisors would verify the financial position as of the decision date and preserve the bank’s assets during the proceedings. The central bank is expected to announce the mechanism for recovering covered deposits as the resolution process continues and the fate of other balances is determined.