Banking Governance and Digital Disruption

Two retail banks close with prosecutions in train

Two relatively new banks exited the industry in late October and early November in strange circumstances. Ueno Bank, for a time the leading bank in Paraguay, was closed down on Tuesday 3 November by regulators. Alta Bank in Serbia enjoyed a spectacular rise under the patronage of the government party but was quickly exposed after a recent election and was closed on Saturday 31 October.

Ueno Bank in Paraguay leaves 3 million customers in suspense

Ueno Bank quickly became ubiquitous in Paraguay, becoming sponsor of the Paraguayan soccer team which earned international recognition for its particularly robust brand of football during the 2026 World Cup. But on Tuesday, Ueno was forced to suspend all services as the financial authorities froze the accounts of three million customers (out of an adult population of 5 million). From Reuters: “Concerned customers, including pensioners who receive state benefits through ueno, stood outside closed bank locations on Tuesday seeking access to their savings. ‘We're demanding access to money we have here at ueno bank,’ said Manuel Cáceres from Ñemby, on the outskirts of the capital, Asunción. ‘Unfortunately, a lot of people, myself included, are spending the morning like this,’ he said.”

Ueno grew out of Grupo Vázquez, a family conglomerate whose consumer lender Credicentro — in which Paraguayan president Santiago Peña was a shareholder from 2019 — later became Ueno Holding. In 2021 the group bought Financiera El Comercio and relaunched it as Financiera Ueno, a digital finance company chaired by Carlos Carvallo. When Peña became president in 2023, he appointed Carvallo head of the central bank.

Ueno won a full banking licence that November and went on to attract some $850 million in public funds, including around $380 million from the state pension fund. Peña sold his shares in the holding company in 2025. In 2024 Grupo Vázquez bought rival Visión Banco and merged it into Ueno, bringing in a network of some 70 branches. But Ueno’s spectacular growth drew the attention of the central bank, which warned as far back as June that Ueno was “channelling an excessive volume of credit toward companies affiliated with its own ownership group”, writes The Latin Times.

A leaked supervisory report this summer put loans from Ueno to three Grupo Vásquez-linked companies at about $146 million, well above the legal limit. But Ueno’s capital cushion continued to erode. As recently as 29 October, the bank announced a $100 million recapitalisation and reported capital comfortably above the minimum – but the Central Bank disagreed, finding its solvency levels below half the legal minimum. Following the closure of the bank, Mr Carvallo described the situation as “an isolated, one-off event” and claimed the financial system “remains sound and healthy”. Mr Carvallo submitted his resignation on Tuesday but said he would stay on to see through the bank’s resolution. Prosecutors ordered eight arrests.

Paraguay has a recent history of crossover between political leaders and bankers. Santiago Peña had served from 2015 to 2017 as Finance Minister under President Horacio Cartes: the Cartes family owns Banco Basa, a business bank formerly known as Bank Amambay. When Peña lost his seat in 2018, he joined the board of Bank Amambay. Mr Cartes remains the president of the ruling Colorado party.

The Alta Bank Story

Serbian authorities revoked the licence for the country’s Alta Bank and arrested the bank’s leaders early this week on suspicion on emptying out the bank’s vaults and preparing to flee the country. The collapse of the bank comes after the surprise defeat two weeks ago of the Vučić and his Serbian Progressive Party at the hands of Student List, a student-led coalition. William Black, former California Savings & Loan Commissioner, once said ‘the best way to rob a bank is to own one’, and that appears to be what Alta Bank’s owner attempted.

The Serbian October election defeat marked the start of the end for Alta Bank which had a political patron in the ruling party. Davor Macura went into business by founding a currency exchange company in 2007, and later created the modern incarnation of Alta Bank after acquiring the state’s 28.8% share of JUMBES Bank in 2019. (The former Yugoslav state bank JUMBES was established in 1979.) Macura was reportedly close to the Serbian Progressive Party, and Alta Bank expanded quickly and picked up government business. Opting to cater to Russian individuals and businesses who arrived to Serbia after the 2022 invasion of Ukraine, the bank grew its balance sheet several fold.

But after the election, an anti-corruption drive focused on Alta and Macura. Prosecutors said that bank treasury officials gave Macura access to the vault. “Davor Macura and two other bank officials were arrested following days of searches at the bank’s premises and Macura’s home, Serbian police said on Tuesday,” writes the FT. “Macura was suspected of illegally removing more than €380mn worth of cash from the bank’s vault, they added. The National Bank of Serbia on Saturday revoked the bank’s operating licence, saying it had come under a financial and liquidity strain after its clients, many of Russian nationality, made large withdrawals and millions of euros worth of those funds left the country last week.” Macura has denied any wrongdoing.

A world-beating theft at Binance

Law enforcement agencies say that a group of state-sponsored hackers from North Korea, codenamed TraderTraitor by the US government, was responsible for the theft of $6.5 billion worth of cryptocurrencies and stablecoins last week from the Binance exchange. Hackers appear to have gained access to the system before shipping stablecoins such as Tether and Circle and cryptocurrencies such as bitcoin and Ethereum. Industry players were able to freeze several billion in stablecoins before the hackers could trade them for “unfreezable” cryptocurrencies. Chainalysis said that the largest crypto theft in history started at 4.20pm and the freezes began less than an hour later, during which time the hacker traded $325 million in stablecoins for $285 million in ETH over nearly 20 minutes to stay ahead of freezes. An estimated $2.8 billion was frozen but the rest went into a network of systems designed to obscure the trail. Chainalysis said that some of the funds had already been co-mingled with $385 million of funds stolen in September this year from Bitget by the same group. The theft now puts the same group’s $1.5 billion theft from exchange Bybit in February last year into second place on the all-time largest heists.

Binance said it will restore the value of the stolen coins to their owners using its bitcoin reserve fund and its own resources. Industry sources estimated Binance revenues in 2025 to be between $16bn to $17bn with profits of $5 billion. While blockchains have proved resilient, hackers target centralised points of control such as exchanges, which many people use to store and trade their cryptocurrencies. While authorities can track stolen coins, hackers split batches into small amounts and may now spend months laundering the proceeds of the Binance theft.

(Update) The Social Engineers

More fascinating detail emerged about the Binance theft in the days after the event – and as usual, the main leverage of the hackers was social engineering. Several months before the theft, hackers using a fake company lured a Binance engineer to a fake job interview, which led to the engineer downloading a piece of software while doing a second interview via an unnamed social media channel (though we could speculate this was Telegram). Several months were allowed to elapse during which the malware lay dormant, until the attackers put their plan into action. The extensive preparation allowed the attackers to move over six billion dollars in cryptocurrency from the Binance exchange in 20 minutes. While the various blockchains remained intact, the blockchain engineers were compromised and provided the avenue for the hackers to access the system.

Go time for South Africa’s challengers

South African bank GoTyme is aiming to overtake Capitec, which itself has outpaced South Africa’s big four in customer numbers in recent years. “It became Africa’s first profitable standalone digital bank this year and has 13 million clients, making it the nation’s second biggest by that metric. It’s targeting 30 million by 2036,” reports Bloomberg. (ABSA has around 13 million clients also, while Capitec is far ahead with over 26 million customers.)  ‘I want us to get to one in two South Africans as customers,’ Chief Executive Officer Cheslyn Jacobs said in an interview. Capitec had more than 26.6 million personal and business clients as of Aug. 31. GoTyme is banking on its partnership with the continent’s largest insurer, Sanlam, that will allow both companies to take deposits, and provide unsecured personal loans as well as life cover as soon as next year.”

GoTyme, which is a hybrid player using kiosks, is also watching its rear flank for Pepkor, the clothing and mobile phone seller, which plans to launch as a lender next year. “They are the largest reseller of value-added services in the country, they sell a million smartphones a month, so they are sitting on a captive base,” Jacobs said. “They’ve got distribution, they know who their customer is, they serve them really well in their core business, so you have to assume that they’ll do something very similar with their banking services.”

It’s a sign of what could happen elsewhere. In advance of our Council next week, in particular when we’ll look at Ethiopia, we’ve been looking at the big shifts in recent years which have included the withdrawal from many markets of the big international banks. The new challengers now are often local banking players (such as Capitec, GoTyme and Discovery in South Africa), mobile money players (such as MoMo in Ghana), and fintechs (such as OPay and Moniepoint in Nigeria) which are fast gaining market share and becoming the daily financial platform for many customers, even if they also have bank accounts.

HSBC grows its AI HQs

Next week we’ll also explore what AI means for relationships in banking, and we’ll start by looking at the role of AI in wealth management, with developments here likely to feed into the mass market. As Carlos Wanderley noted recently, many bank workers fear that digitalisation and AI will take their jobs, and there are some early signs of this happening in wealth management. Let’s look for instance at HSBC. In October, Finextra writes, it emerged that the lender was axing 70 per cent of its UK financial advisors as part of swingeing cuts to its wealth management business driven by rising use of AI. Now the bank plans to establish a global AI and emerging technologies research centre based in Hong Kong. “Hong Kong University of Science and Technology has been selected as an anchor academic partner, contributing scientific expertise, specialist research, and access to talent and connections to leading academic institutions. Additional technology partners may also join. The Hong Kong institute comes months after HSBC said it will set up a global artificial intelligence centre of excellence in Singapore, hiring around 100 specialists to work under new chief AI officer David Rice. HSBC has been working to deploy AI at scale across its operations: it has inked major deal to deploy the technology with Mistral AI and Google Cloud….”