Paraguay’s president has said that 1.74 million depositors of the failed Ueno Bank have received payments from the country’s deposit guarantee fund, as the authorities continue to deal with the lender’s collapse.
Pedro Alliana said on Tuesday 10 November that the payments had reached almost 95% of the savers affected and covered by the scheme. He expected the remaining advance payments to be made by Wednesday 11 November, in line with legislation passed by Congress.
The announcement describes progress in reaching depositors, not the proportion of all the money held at the bank that has been returned. A person receiving a payment has not necessarily recovered their entire balance, and the Wednesday timetable was a forecast rather than confirmation that every outstanding payment had been made.
How the guarantee works
Paraguay’s central bank placed Ueno into a resolution process after finding that its solvency ratio had fallen below half the required minimum following adjustments to its financial statements. The central bank’s decision was dated 2 November and announced on 3 November.
The country’s Deposit Guarantee Fund provides protection up to 75 monthly minimum wages for each eligible depositor at a financial institution. The central bank said that limit was equivalent to 228.3 million guaraníes. It applies per depositor and institution, rather than separately to every account a customer holds there.
The authorities also set out a system for advances against the guarantee. In its 4 November notice, the central bank said an advance could be worth up to 40 minimum wages, with overdue debts to Ueno deducted. The fund’s full coverage limit and the advance are therefore different figures.
For savers who already had accounts elsewhere in the national financial system, the bank said the advance would be deposited into the account with the highest available balance. For those without another account, it said a savings account would be opened at a bank or financial institution in their name.
The central bank also announced a way for depositors to check which institution had been assigned to receive their advance. It has advised customers to rely on its official communications rather than rumours or unverified information.
Money still at stake
The size of the protection scheme shows why the number of people reached cannot be treated as a measure of the total money recovered. Ueno held approximately US$2.8 billion in deposits, according to figures given by the head of the central bank’s deposit guarantee fund.
The fund expected to cover about 4.6 trillion guaraníes, or roughly US$740 million, the official said. That was an estimate of around 27% of the bank’s total deposits, not a final accounting of what every customer would receive.
Amounts above the guarantee limit would have to be dealt with through the bank’s resolution process. The central bank has said it will use the legal mechanisms available to seek the greatest possible protection for balances beyond the fund’s coverage. That is not the same as a guarantee of full repayment.
Public-sector and retirement resources are among the funds affected. Paraguay’s Social Security Institute, which administers pensions and health plans, had money at Ueno. Alliana said recovery of pension-related resources would be a government priority.
The bank’s failure also had political consequences. The Senate removed Santiago Peña from the presidency on 6 November, and Alliana, previously vice-president, was sworn in as his successor. The latest payment announcement concerns a separate stage of the response: getting guarantee advances to depositors while the wider resolution continues.
