CRISOL Y ENCARNACIÓN FINANCIERA S.A.E.C.A. (CEFISA)

What it is

CEFISA was founded in 1997 from the merger of two smaller lenders, Crisol S.A. de Finanzas and Encarnación Financiera S.A., created to serve micro and small businesses, sole traders, and operators in agriculture, commerce, industry, and services. In practical terms, it was Paraguay’s lender of last resort for small entrepreneurs who could not access the country’s mainstream banks.

In November 2016, facing distress under its earlier ownership, the entity sold its active and passive loan book to another local lender. In late April 2017, CEFISA was acquired by a new business group, which designed a strategic plan and relaunched operations under a new management team.

Who owns it

The ownership and administration was concentrated in its principal shareholder-directors, who held both the boardroom and the capital, with a president, vice-president, and three further board members each serving renewable two-year terms. The exact names and percentage stakes of the 2017-era acquiring group are not disclosed in available sources; ownership was closely held, not publicly floated.

The shareholders committed capital repeatedly over the entity’s final years, injecting funds to bolster its equity base. Despite these top-ups, no outside strategic investor or state entity was involved, leaving the firm exposed when its loan book turned bad.

Who runs it

Regino Moscarda served as president of CEFISA as of 2021, leading the relaunched entity through its years of growth and, ultimately, into its collapse. When the Banco Central del Paraguay (BCP) opened the formal resolution process in December 2022, the Superintendencia de Bancos designated external interveners to take control of the entity in accordance with Law N° 2331/03.

A CFO name was not publicly disclosed in available sources.

The money, in plain words

At its December 2021 peak, CEFISA held total assets of Gs. 718,624m (~USD 118.8m at current FX) and a loan book of Gs.

514,416m (~USD 85.0m). Its equity buffer — the share of assets funded by owners rather than depositors — was 11.87% at December 2021, thin but above the 10% regulatory floor.

The return on equity — the profit earned on each guaraní owners put in — collapsed from 7.82% in 2019 to just 0.83% in 2021, a signal that lending margins could no longer cover rising bad loans. By the first quarter of 2022, delinquency had surged to 11.21%, more than double the system average of 5.83%.

The arithmetic was merciless: the ratio of overdue loans to shareholder equity hit 60.16% by March 2022, the highest of any financiera in Paraguay — meaning bad debts could have wiped out more than half of owners’ capital.

Deposits were heavily concentrated: the top ten depositors held 63.7% of the total, and term certificates of deposit (CDAs) accounted for 85.8% of deposit funding. That concentration meant that if even a handful of large depositors withdrew, the liquidity position would collapse rapidly — which is precisely what happened.

What it is doing now

The board of the Banco Central del Paraguay resolved the dissolution of CEFISA after it failed to meet the minimum solvency requirements, following other earlier non-compliances. BCP president José Cantero stated that the closure would not destabilise the financial system, since CEFISA’s loan book represented only 0.33% of the national total and its deposits 0.38%.

Three banks and two financieras absorbed CEFISA’s assets and liabilities in a combined mechanism, with the BCP arranging payment of insured deposits through this group. The securities regulator suspended CEFISA’s bond-market operations in November 2024 after the entity failed to file its mandatory quarterly financial report for the period to September 2024.

The entity’s exchange listing is formally suspended; its website and mobile app are no longer operational.

What to watch

• Depositor recovery: The winding-up process by BCP interveners will determine how much the remaining depositor pool — those beyond the guaranteed minimum — ultimately recovers. Interveners are charged with conserving assets and carrying out the resolution in line with BCP regulations.
• Systemic lesson: CEFISA’s failure reduced Paraguay’s active financieras to five by end-2023; the BCP conducted the process without affecting depositor interests or broader financial stability.
• Paraguay’s financiera sector: The concentration of bad loans in cattle-raising, construction, and commerce — the same sectors CEFISA was exposed to — remains a vulnerability for any lender operating at the micro-SME end of the Paraguayan market.

This is news, not investment advice.