Paraguay: digital lender Ueno taken over by the central bank, nearly three million customers locked out of their accounts

Within days, Paraguay's central bank put the country's leading digital bank into resolution, suspended access to the accounts of nearly three million customers and saw its own governor resign. Groupe VINSIX sets out what is known, what is not yet known and what the episode changes for anyone financing or operating in Paraguay.

What happened

Ueno Bank, a digital lender launched in December 2023 and controlled by Grupo Vázquez, was put into resolution by the Central Bank of Paraguay (BCP) early this week. Cards, transfers and apps were suspended. According to the BCP, the solvency ratio had fallen below half the regulatory minimum, with weaknesses in lending and liquidity strains. Since September, local press had published BCP documents pointing to possible irregularities in loans to companies linked to the controlling group.

The figures

• More than 2.9 million customers affected, including about 32,000 beneficiaries of the IPS social security institute who received their income through the bank
• About USD 2.8 billion in deposits according to Mexican business daily El Financiero; figures vary by source
• Public-sector deposits of about USD 870 million, close to 29% of the bank's deposits at end-June according to Bloomberg, including USD 345 to 380 million of IPS exposure
• Eight arrest warrants issued by prosecutors and two people arrested as of 3 November; several outlets report eight executives arrested on 4 November

The authorities' response

President Santiago Peña asked BCP governor Carlos Carvallo to resign; he submitted his resignation on 3 November and stays on during the proceedings. Congress fast-tracked a law allowing the deposit guarantee fund to repay depositors: up to 40 monthly minimum wages per saver within five business days, while local press also cites a statutory guarantee ceiling of 75 minimum wages. The banking superintendency is appointing auditors to establish assets and liabilities within 15 days at most. The IPS says pensions and year-end bonuses will be paid on time.

The contagion risk

Rumours of further interventions drew crowds to branches and caused access problems on several payment apps. The banking association (Asoban) denied the rumours and blamed the slowdowns on a surge of new customers; the BCP says the system maintains adequate solvency and liquidity levels and calls this an isolated case. In markets, Ueno's 2031 dollar bonds and Paraguayan sovereign debt weakened, though no price or yield levels were published.

What to watch

Four milestones matter: the split of assets and liabilities within 15 days; the actual repayment timetable for depositors and public funds; the appointment and Senate ratification of new BCP leadership; and the guarantee fund's capacity to absorb the burden. The matter is also political: opposition lawmakers are calling for impeachment of the president, who was a business partner of the controlling group until March 2025.

VINSIX view

A supervisory failure at a single institution is not, at this stage, a systemic crisis: the authorities have not targeted other banks. It does, however, touch two things that matter for financing: depositor confidence and the exposure of public funds, which made up close to a third of Ueno's deposits.

For a transaction financed, domiciled or collected in Paraguay, three habits apply: identify the custodian bank and payment counterparties, avoid concentrating flows in a single institution, and build a precautionary delay into timetables until the resolution procedure is closed. Paraguay keeps its strengths, but the soundness of banking supervision is part of country risk, and this case puts it to the test.

This article presents an overall analysis based on press reports and does not constitute personalised advice or a promise of return.

The Editorial Team — Groupe VINSIX

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