Paraguay Central Bank Pays $644M to Ueno Depositors
The digital lender's collapse leaves deposit insurance under strain as payouts begin for 1.8 million clients. The post Paraguay Central Bank Pays $644M to Ueno Depositors appeared first on Global Finance Magazine .
In the wake of Ueno Bank's closure, Paraguay's Central Bank has distributed roughly $644 million to over 1.8 million affected depositors, as reported on Thursday. This substantial payout may deplete up to $928 million, or 58%, from Paraguay's Deposit Guarantee Fund, leaving only $672 million to address future bank failures. However, the risk of contagion appears minimal, as deposits, rather than loans from other banks, were the primary source of funding for Ueno Bank, according to Rhys Hicks, a banking and payments analyst at GlobalData.
Hicks explained that other banks in Paraguay would bear the financial burden, and while they are currently taking on this responsibility, it has placed them under strain. The bank's liquidation could potentially pave the way for improved regulation in the country, although it may also result in increased costs for individuals. The Central Bank commenced payouts to depositors on November 5, and by the end of the following week, 93.1% of all affected depositors had received their funds.
The remaining depositors either have account restrictions, hold certificates of deposit, or have transactions involving the Development Finance Agency. Payouts from the Deposit Guarantee Fund account for approximately 12.5% of Ueno Bank's reported deposits as of October 28. Despite recent digital bank failures in Latin America, Ueno Bank's collapse was primarily due to its own lending practices, as opposed to issues at its parent bank.
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