Paraguay seeks to return part of the savings frozen at Ueno Bank within 24 hours

Paraguay's Senate has approved a reform to the deposit guarantee law, enabling Ueno Bank customers to receive up to 40 minimum wages, or about 121 million guaraníes, within 24 hours of the bank's resolution. The bill will now be reviewed by the Chamber of Deputies, expected to deliberate on Thursday. The existing law permits the Deposit Guarantee Fund to pay savers at a failed bank within 15 days, extendable by an additional 15 days.

Customers with loans will only have overdue installments deducted, not their total debt. The advance is a pre-payment and does not alter the maximum coverage of up to 75 minimum wages, or 228 million guaraníes per depositor. According to the Central Bank, this limit covers 97% of customers, with the Social Security Institute and pension fund paying large savers above this figure.

The Senate rejected a proposal to extend the guarantee to all public funds deposited in the bank. The Central Bank's interim president, Liana Caballero, announced that the first payment would be up to 10 million guaraníes, with depositors divided into three tranches. However, there are no specific dates, locations, or requirements for the payments.

The Association of Banks of Paraguay supports the advance but advises caution against using the fund to return money from pension funds. President Santiago Peña cancelled his participation in the Ibero-American Summit in Madrid, and the opposition plans to pursue impeachment proceedings against him and Vice President Pedro Alliana.

The Central Bank seized Ueno Bank after its solvency ratio fell below the minimum requirement of 12%, and irregular loans to companies owned by the bank's owners, the Vázquez Group, were discovered. Eight executives were detained. The crisis also impacts South American football’s governing body, Conmebol, which has $14 million deposited in the bank, though payment of prize money for the Copa Libertadores and Copa Sudamericana finals remains unaffected.

Following the bank's takeover, eight executives were detained, and the media outlets of the Vázquez Group closed, leaving around 300 employees unpaid. Savers protested outside the Central Bank on Wednesday night, demanding their deposits be returned.