Paraguay is facing its biggest banking crisis in decades after Paraguay’s central bank seized Ueno Bank Paraguay, the digital lender used by around 3 million people — roughly 60 per cent of the adult population. Customers woke on Tuesday to find their apps frozen, their cards dead and their savings out of reach, and the fallout has already reached the presidential palace and the streets of Asunción. The Ueno Bank collapse is the most searched topic in Pakistan today.
The Central Bank of Paraguay, known as the BCP, voted unanimously late on Monday 2 November to place Ueno Bank into resolution. Announced just after 3 a.m. on Tuesday, the move froze the bank’s app, electronic transfers and cards within hours, leaving customers unable to see their balances, let alone withdraw cash.
Why the Ueno Bank collapse happened
The trigger was Ueno’s solvency ratio, the measure of a bank’s capital against its risk-weighted assets. It had fallen to 5.56 per cent, less than half the 12 per cent legal minimum. The shortfall emerged from accounting adjustments during a regularisation process, and it was abrupt: Ueno had declared a 15.01 per cent capital ratio as recently as March.
The warning signs had been building for months. The central bank opened a review of Ueno on 5 June and warned the lender that it was lending too heavily to companies connected to its own owners, the Vázquez Group. In October, Ueno’s bonds sold off heavily, and supervisors opened a preliminary administrative proceeding over loans to related companies. Fitch Ratings changed its outlook on the bank to negative last month. Days before the seizure, Ueno announced a US$100 million capital raise. Rating agency FIX SCR has since downgraded Ueno’s national long-term credit rating from AA-py to D.
Resolution is not the same as an ordinary bankruptcy. Under Paraguay’s Law 2,334/03 on deposit guarantees, regulators can move deposits to sounder banks before liquidating the failed bank’s remaining assets. Around 120 central bank officials were sent to Ueno branches to carry out reconciliations.
Three million customers locked out of their money
The scale of the Ueno Bank Paraguay collapse is what makes it extraordinary. Ueno says it has about 3 million customers in a country of roughly 6.1 million people — around 60 per cent of Paraguay’s adult population. It handled more than three million transactions every day.
That reach is also why the shutdown has hit so hard. Customers gathered outside closed branches guarded by police, and crowds mobilised in Asunción for a second day, demanding the full return of their funds. There were incidents with police near Congress as the protests grew.
The bank also managed between US$800 million and US$850 million in public money, including about US$380 million from the Instituto de Previsión Social, the state pension and health institute. That money includes the pensions of around 32,000 retirees who collect their payments through Ueno. The institute says November pensions will be paid as usual because the payment funds sit in another bank.
What happens to depositors’ savings
Paraguay’s deposit guarantee scheme covers up to 228.3 million guaraníes — about US$38,000 — per depositor, per bank. According to the central bank’s preliminary estimates, that limit is enough to cover about 97 per cent of Ueno’s depositors in full. By law, the money must be paid within 15 calendar days of the takeover, a deadline that can be extended once, so repayment is due by around 17 November.
As a first step, the central bank said depositors would soon receive up to 10 million guaraníes, about US$1,700, minus any debts they owe to Ueno, although it gave no date. President Santiago Peña has also sanctioned a law to speed up payments from the Deposit Guarantee Fund, allowing an initial advance of up to 121.76 million guaraníes. Paraguay’s securities regulator has suspended withdrawals from certain mutual funds linked to the bank.
The picture is less comfortable for larger depositors. Moody’s has reported that deposits within the guarantee limit represent only around 30 per cent of Ueno’s total deposit value, which means a large share of the money in the bank sits above the protected threshold. Ueno raised US$350 million through a bond sale to global investors in March 2026, and international creditors are now exposed to the failure.
Arrests, a resignation and an impeachment push
The Paraguay bank crisis has become a full political crisis within days. Prosecutors ordered the arrest of eight people, including Ueno president Juan Manuel Gustale and chief executive Federico Miguel Vázquez Villasanti, the founder and head of Grupo Vázquez, as part of an investigation into suspected breach of trust and other offences.
Central Bank president Carlos Carvallo resigned on Tuesday at President Peña’s request. He will stay on temporarily to oversee the transition. The resignation carries its own sting: Carvallo was previously Ueno Bank’s executive president, appointed by Peña to lead the central bank.
On Wednesday 4 November, 35 opposition lawmakers filed impeachment proceedings against President Santiago Peña and Vice-President Pedro Alliana. The Santiago Peña impeachment filing turns the banking failure into a direct challenge to his presidency.
The political charge is sharpened by Peña’s own history with the bank’s owners: he remained a business partner of the group that owned Ueno until March 2025, according to the Associated Press and Reuters. The bank says he was never a shareholder or investor in Ueno itself. Peña has agreed with congressional leaders to fast-track legislation expediting payouts to depositors and guaranteeing the return of public money.
The Paraguay central bank insists the Ueno Bank collapse is an isolated case that does not threaten the stability of Paraguay’s wider banking system. Ueno accounted for about 9 per cent of the country’s deposits and 8 per cent of its loans at the end of September. But for the millions of Paraguayans who banked with Ueno, the reassurance will only count when the money starts flowing back. The first test comes within days, when the central bank’s promised advance payments are due to begin.
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