Paraguay central bank chief quits as ueno bank resolution announced

Paraguay Central Bank President Carlos ​Carvallo submitted his resignation on ‌Tuesday as ​the bank launched resolution proceedings for digital lender ueno, having detected a shortfall in its solvency ratio. The central bank and ‌Carvallo, who was president of the fast-growing digital bank until August 2023, have come under pressure over how they supervised the lender, and over its political ties.

The case is testing the reputation ‌that has helped Paraguay become one of South America's emerging destinations for foreign capital, much ‌of it from neighboring Brazil. Carvallo said he had submitted his resignation but would remain in office while proceedings involving bank ueno are carried out.

"Stepping aside will help to quell the controversy surrounding the BCP (Central Bank of ⁠Paraguay)," Carvallo ​told a press conference ⁠after the resolution proceedings were announced. He said his resignation would allow the central bank and the banking superintendent's office ⁠to carry out their work without being distracted by political and media disputes.

Ueno, majority-owned by Grupo ​Vazquez, has around 3 million customers and administers some $850 million in public funds in Paraguay. Grupo ⁠Vazquez and bank ueno did not immediately respond to Reuters requests for comment.

The resolution process is aimed atprotecting ⁠depositors ​and preserving financial stability, the central bank said, adding that the case was isolated and did not point to broader problems in the financial system. "The Superintendency of Banks will ⁠appoint auditors to verify ueno's asset position as of the resolution date," the central bank said.

Several lawmakers ⁠have calledin recent ⁠months for the dismissal of the central bank's senior management after rejecting a report on the lender that they said was incomplete.