Ueno Bank, linked to the Grupo Vázquez SAE, recorded a new increase in the capture of public funds in June, according to data from Paraguay's Ministry of Economy and Finance. The total amount of state and social security institute IPS funds deposited in the institution is now double its net equity, the main indicator of a bank's solvency.
A report from the General Directorate of the Public Treasury shows that in just 30 days, the bank's total deposits grew by approximately 116.6 billion guaranis in local currency and 4.3 million dollars in foreign currency, a total increase of about 23.4 million dollars between May and June. The largest monthly growth occurred in US dollar checking accounts, which increased from 219 million to 224 million dollars.
Ueno Bank's net equity, which represents the capital available after liquidating assets and settling debts, was 2.2 trillion guaranis at the close of the previous fiscal year. However, the capture of public money reached 4.9 trillion guaranis in June, far exceeding this capital guarantee.
This massive growth of state funds in the bank, which previously had no participation in the custody of public funds, was consolidated in just 30 months, directly coinciding with the administration of President Santiago Peña. Federico Miguel Vázquez, president of the Grupo Vázquez SAE, which controls Ueno Bank, is a former business partner of the president.
The IPS, chaired by Isaías Fretes, had admitted in a session of its Board of Directors that Ueno Bank was above the limit for the placement of funds, following a note from the Superintendency of Pensions, and announced the withdrawal of checking deposits to comply with legal limits. However, the data suggests the measure was not implemented, as the latest available IPS investment report is from April.
Instead of updating its reports, the IPS issued a statement claiming it is "adjusting its investment portfolio" and that "to date, there is no resolution that determines a breach of regulations." The statement served as a defense for Ueno Bank, which in turn issued a note relying on the same text.
An additional point of concern is that Ueno Bank carries a liability of 300 million dollars from the deteriorated and uncollectible portfolio of the defunct Visión Banco. This heavy legacy is being liquidated through an unprecedented flexibility granted by the Central Bank of Paraguay, which allows the bank to defer the losses over a period of 20 years.