The Central Bank of Paraguay (BCP) announced that its board voted unanimously on Monday, November 2, to initiate the resolution procedure under Law No. 2334/03. The decision followed a review that revealed Ueno’s solvency ratio—a metric comparing a bank’s capital to its risk-weighted assets—had fallen below 50% of the legal minimum. Unlike standard bankruptcy proceedings in court, the resolution mechanism allows regulators to transfer deposits to stable institutions before liquidating remaining assets to repay creditors.
The scale of the disruption is significant. Ueno Bank claims to have approximately 3 million customers, a figure equivalent to roughly 60% of Paraguay’s adult population. The bank manages between $800 million and $850 million in public funds. Notably, this includes about $380 million invested by the Instituto de Previsión Social (IPS), the state pension and health fund. While the BCP insists the crisis is “an isolated matter that does not indicate broader financial instability,” the involvement of such a large share of the adult population and critical social security funds has triggered immediate concern over systemic risks.
The political dimensions of the collapse are prominent. Critics point to a conflict of interest stemming from Peña’s early appointment of Ueno’s then-chief executive, Carlos Carvallo, to lead the central bank. Peña remained a business partner of Grupo Vázquez, the conglomerate that owns Ueno, until March 2025, although he and the bank deny any wrongdoing or direct shareholding. Carvallo, who has recused himself from decisions involving Ueno, stated that regulators initially raised concerns about the bank’s lending to companies tied to its owners—a practice strictly limited to prevent owners from steering customer funds into their own businesses. He claimed that deeper inspections uncovered further irregularities, which the BCP plans to report to judicial authorities.
For depositors, the immediate consequences have been severe. On the morning of Tuesday, November 3, Ueno’s mobile application, debit cards, and credit cards became unavailable, blocking users from viewing balances or making transactions. The BCP has stated that the Superintendency of Banks will appoint officials to take over management, assess the bank’s financial position, and preserve its assets. The regulator emphasized that its primary goal is to protect customer savings and prevent contagion to other banks.
Under Paraguay’s banking law, the Deposit Guarantee Fund (Fondo de Garantía de Depósitos, FGD) covers eligible deposits up to 75 monthly minimum wages. This currently amounts to ₲228,300,000, or approximately $38,270 per depositor per institution. For customers with multiple accounts, the limit applies to their combined eligible deposits. Authorities have up to 15 calendar days to arrange the return of these guaranteed funds, placing the initial deadline on November 17, 2026, though a single 15-day extension is possible.
The BCP stopped short of promising full repayment for balances exceeding the guarantee limit, stating only that it would seek the “greatest possible protection” for larger holders. The outcome for these customers will depend on the resolution process and any subsequent liquidation. Gladys Vera, the finance manager for the IPS, confirmed that retirees would still receive their monthly payments as scheduled because the funds for disbursement are held at a separate bank. However, she noted that the fund would take legal action to recover its $380 million investment and would need to relocate the 32,000 retirees who currently collect pensions through Ueno.
The intervention has prompted calls for accountability, with some demanding the ousting of central bank leadership due to perceived conflicts of interest. While the BCP maintains that its actions are strictly technical and aimed at preserving financial stability, the timing and the bank’s political connections have fueled public debate. The regulator has announced it will investigate who was responsible for the bank’s financial deterioration and impose sanctions where legally justified.
As the resolution proceeds, the focus shifts to the practical recovery of funds. The BCP director, Liana Caballero, stated that authorities are working continuously to shorten the waiting period for depositors. The next critical step is the official announcement of how and when customers can recover their guaranteed funds, a process that will test the resilience of Paraguay’s financial safety nets and the government’s ability to manage a crisis with significant political overtones.
