A major banking crisis has erupted in Paraguay after the country’s central bank took control of Ueno Bank, leaving approximately 3 million customers unable to access their accounts and raising questions about hundreds of millions of dollars in public funds held by the institution. The bank’s customer base represents roughly 60% of Paraguay’s adult population, making the intervention one of the country’s most consequential financial disruptions in recent years.

The Central Bank of Paraguay announced November 3 that it had unanimously approved a resolution process for Ueno after determining that the bank’s solvency ratio had fallen below 50% of the minimum legally required level. The regulator said adjustments to the bank’s financial statements during an examination of its finances revealed the shortfall. The decision effectively shut down the bank’s operations, including its branches, mobile application and payment services.

Customers across the country suddenly found themselves unable to withdraw, transfer or otherwise access their money. People gathered outside closed branches demanding answers, while police were deployed to prevent unrest. The disruption has affected ordinary account holders, businesses and retirees who relied on Ueno for everyday financial transactions.

Ueno reportedly manages between $800 million and $850 million in public funds, including approximately $380 million invested by Paraguay’s Social Security Institute, known as IPS. The state institution administers pensions and healthcare benefits and has more than 32,000 retirees who receive their monthly payments through Ueno. Officials have said pension payments will continue as scheduled, with arrangements being made to transfer those retirees to another financial institution.

The government-backed Deposit Guarantee Fund covers up to 75 monthly minimum wages, equivalent to approximately 228.3 million Paraguayan guaraníes, or roughly $38,000 per depositor. Preliminary estimates indicate that the guarantee fully covers the balances of approximately 97% of Ueno’s depositors. However, customers with larger accounts face uncertainty over how much of their remaining money they will recover. The central bank has said it will seek to protect deposits beyond the guaranteed amount, but has not promised full repayment.

The collapse has also triggered a political crisis surrounding President Santiago Peña. Peña maintained business ties with Grupo Vázquez, the conglomerate that controls Ueno, until March 2025. The bank’s connections to the president have drawn scrutiny over potential conflicts of interest, particularly after the government and state institutions placed substantial public funds with the lender.

The controversy also involves Central Bank President Carlos Carvallo, who previously led Ueno before Peña appointed him to head the country's monetary authority in 2023. Carvallo submitted his resignation at Peña’s request but said he would remain temporarily to oversee the intervention. Regulators have also acknowledged that they previously raised concerns about Ueno lending money to businesses connected to its owners.

Prosecutors have ordered the arrest of executives and directors connected to the bank as part of an investigation into suspected financial misconduct, including alleged breaches of trust. Eight people were initially targeted in the investigation, and authorities have moved to detain individuals connected to the institution. The allegations remain under investigation.

The fallout has intensified calls for Peña to face political consequences. On November 4, 35 opposition lawmakers filed impeachment articles against the president, accusing his administration of conflicts of interest, mishandling pension funds and concealing information surrounding the bank’s collapse. The opposition does not currently have the two-thirds congressional support required to remove him, although the crisis has also produced criticism from members of the governing Colorado Party.

Peña has called for accountability and said those responsible for irregularities should face the courts. His administration has also moved to accelerate legislation intended to speed up deposit reimbursements and protect public funds. The central bank, meanwhile, has emphasized that Ueno’s financial problems are an isolated case and do not indicate a broader failure of Paraguay’s banking system.

The intervention has nevertheless shaken confidence among depositors and raised questions about the oversight of one of Paraguay’s fastest-growing financial institutions. For millions of customers, the immediate concern remains when they will regain access to their savings and whether those with balances exceeding the government guarantee will recover their money.