Paraguay’s central bank initiated a major intervention early Tuesday, seizing the digital lender Ueno Bank. The move has placed the savings of approximately 3 million customers—roughly 60% of the nation's adult population—into a state of uncertainty. The decision followed a unanimous board vote on Monday, triggered by the bank’s solvency ratio falling to less than half of the legal minimum requirement.
Unlike a standard court-led bankruptcy, the central bank’s resolution process allows regulators to transfer deposits to more stable financial institutions before liquidating remaining assets to satisfy creditors. Ueno Bank currently manages between $800 million and $850 million in public funds, a figure that includes roughly $380 million invested by the state pension and health fund, known as IPS. Gladys Vera, the fund’s finance manager, stated that while retirees will receive their payments as scheduled this month because the funds are held elsewhere, the institution will pursue legal action to recover its investment and must secure a new bank for 32,000 retirees.
The seizure represents a significant escalation in a scandal that has surrounded President Santiago Peña since he assumed office in 2023. Shortly after his inauguration, Peña appointed Carlos Carvallo, then the chief of Ueno, to lead the central bank, a decision that drew widespread criticism regarding a potential conflict of interest. While Peña maintained a business partnership with Grupo Vázquez, the conglomerate that owns Ueno, until March 2025, both the bank and the president deny any wrongdoing, and the central bank maintains that Carvallo has recused himself from all matters related to Ueno.
Addressing the collapse, Carvallo informed reporters that regulators had previously identified concerns regarding the bank's lending practices to companies associated with its owners, which are subject to strict limits to prevent the misuse of customer deposits. A more thorough inspection later uncovered further serious irregularities that the central bank intends to report to authorities. Carvallo also suggested that recent media coverage contributed to the lender's rapid destabilization.
The central bank has assured the public that these issues are isolated to Ueno and will not impact the broader financial system. Officials are being appointed to manage the transition, evaluate the bank's valuation, and protect assets, with further investigations planned to determine responsibility for the deterioration. Under current banking regulations, each depositor is guaranteed up to 228 million Paraguayan guaraníes—approximately $38,000—via a central bank fund. This payment is mandated to occur within 15 days, with a possible 15-day extension. The central bank has not guaranteed full repayment for larger accounts, stating only that it will seek the maximum possible protection for those depositors.
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Md. Kazi Bijoy is a dedicated tech enthusiast and content creator with a passion for digital innovation. With years of experience in the tech industry, he specializes in breaking down complex topics into easy-to-understand guides. When he isn’t writing, he explores the latest gadgets and researches emerging trends in the digital world.