Key Notes
- Paraguay placed Ueno Bank into resolution after its solvency ratio fell below half the required minimum, disrupting accounts at a lender with more than 3 million customers.
- The central bank is arranging advance repayments through other banks, while IPS moves about 32,000 pension recipients to new payment channels.
- Prosecutors charged 27 people over alleged financial irregularities, while lawmakers filed impeachment articles against President Santiago Peña.
Paraguay has taken over Ueno Bank after a severe capital shortfall, shutting customers out of their accounts and turning the failure of a fast-growing digital lender into a political crisis for President Santiago Peña.
The bank said last week that it served more than 3 million customers. Its collapse has disrupted everyday payments, put public funds at risk and prompted criminal charges against executives and people connected to related businesses. Regulators are now arranging advance repayments through other lenders.
The Banco Central del Paraguay announced the resolution on November 3, following a unanimous board decision the previous day. Adjustments to Ueno’s financial statements had pushed its solvency ratio below half the required minimum. The process can transfer deposits to other institutions before the remaining assets are liquidated.
Deposit Repayments Move to Other Banks
The central bank’s latest payment plan, published November 4, provides an advance of up to 40 minimum monthly wages, with overdue debts to Ueno deducted. It said notifications identifying the receiving bank would begin November 5.
Customers who already hold another domestic bank account will receive the advance in the account with the largest available balance. For those without another account, one will be opened in their name. Payments are to begin within 24 hours, with the process taking no more than five business days, according to the notice.
The advance is separate from the full deposit-insurance ceiling. The central bank’s guarantee covers up to 228.3 million guaraníes per depositor, per institution. Larger balances remain exposed to the resolution’s eventual recoveries; the payout announcement does not promise immediate repayment of every deposit in full.
The urgency extends beyond account balances. Bloomberg reported customers gathering outside closed branches in Asunción and Ciudad del Este, while businesses struggled with disrupted payments. The central bank said Ueno’s problems were specific to the institution and did not represent a generalized weakness across Paraguay’s financial system.
Pension Payments Need New Channels
Ueno managed about $800 million to $850 million in public money, including roughly $380 million invested by the Instituto de Previsión Social, Paraguay’s state pension and health fund, the Associated Press reported. Those investments make the recovery process a matter for taxpayers and pension savers as well as the bank’s individual customers.
IPS has moved to separate the immediate payment of benefits from the recovery of its investments. In a November 3 statement, it said monthly pensions are financed by employer and employee contributions and that the money needed for scheduled payments was secure.
About 32,000 retirees who collected benefits through Ueno are being moved to other banks. IPS said it had coordinated with seven lenders and guaranteed November pension payments and the annual additional benefit for November 17. Beneficiaries will initially be assigned a bank, taking their place of residence into account, and may later choose where to receive payments.
A Capital Plan Gives Way to Criminal Charges
Only days before the takeover, Ueno was presenting a very different outlook. Its October 29 capital plan sought $100 million: $50 million from controlling shareholder U Holdings and another $50 million from Paraguayan private investors.
The bank said the share issuance was expected to be completed within 60 days, subject to regulatory approvals. It also said more than 1.2 million people had opened their first bank account through Ueno since 2021. The resolution followed before that proposed fundraising timetable had run its course.
On November 4, prosecutors charged 27 people over alleged financial irregularities involving Ueno and related companies. Their investigation focuses on loans and overdrafts made in 2025 and 2026, including alleged weaknesses in collateral, documentation and assessments of borrowers’ ability to repay.
Prosecutors also allege that some funds moved to other companies in the same group rather than the projects described in financing applications. They requested restrictions on assets and personal precautionary measures. The allegations remain subject to judicial proceedings.
The securities regulator has also suspended the public offering and trading of Ueno’s securities. Its November 3 order said debt interest and principal payments were suspended and recoveries would depend on the resolution process and legal priority.
The Bank Failure Becomes a Political Crisis
The fallout has reached the institutions responsible for supervising the lender. Central bank chief Carlos Carvallo resigned on November 3. Peña proposed Raúl Vera as his replacement, but the Senate deferred that appointment to committee on Wednesday, Reuters reported.
Peña was a shareholder in Grupo Vázquez, which controls Ueno, until March 2025, according to Reuters. Opposition lawmakers accuse him of conflicts of interest and failures in the handling of public money. Thirty-five legislators submitted impeachment articles in the lower house on November 4, according to Última Hora.
The opposition would need to win over more lawmakers to advance the impeachment effort. Peña has urged political leaders to prioritize depositors and said those responsible for irregularities would face justice “without exceptions.” For customers, the more immediate deadline is the central bank’s five-business-day timetable for advance repayments.
