Paraguay’s central bank has taken control of Ueno Bank and suspended its services after the digital lender’s solvency ratio fell to 5.56%, less than half the country’s 12% regulatory minimum. The intervention has cast doubt on one of the country’s largest digital banks, which has 2.9 million customers, and prompted a political dispute over the government’s ties to the institution.
Announced unanimously by the central bank’s board on Tuesday, the measure began a bank-resolution process that blocks the institution’s assets and liabilities while authorities determine how its resources will be handled and which obligations can be met. Customers reported being unable to use ATMs or access online banking.
Investigations identified weaknesses in credit-risk assessments, inconsistencies in financial information used to approve loans, and transactions involving companies connected to the bank’s shareholders. The central bank’s then-president, Carlos Carvallo, said investigators had also found loans to businesses linked to the group that owns Ueno.
Ueno belongs to Grupo Vázquez, led by Paraguayan businessman Federico Miguel Vázquez, the bank’s founder and controlling shareholder. The institution manages more than $850 million in public funds, including money from the Social Security Institute, Paraguay’s state pension system. The disruption could affect funds associated with about 32,000 retirees.
Paraguay’s deposit guarantee fund covers up to 228.3 million guaraníes per person, equivalent to 75 minimum wages. The monetary authority said the fund could cover 97% of Ueno’s depositors. Customers with larger balances will have to wait for a final assessment by the banking supervisory authority to determine how much of the excess can be recovered.
President Santiago Peña asked Carvallo to resign as central bank president, a departure that took place on Tuesday, and appointed former central bank chief Raúl Vera Bogado as his replacement. On Wednesday, Peña signed a law passed by Congress that provides for depositors to receive part of the guaranteed funds within five days.
Peña said the government’s priority was to protect customers’ savings and urged political groups to put depositors’ interests first. The central bank described Ueno’s situation as an isolated case and said the country’s financial system was generally solid and healthy.
The intervention has also brought renewed scrutiny of Peña’s connections to Ueno. After his election in 2023, he appointed Carvallo, then Ueno Bank’s chief executive, to lead the central bank, drawing criticism over a potential conflict of interest. Peña also faced questions about past business ties to the bank’s owner. In April 2025, he told Paraguayan media that he had stopped being a shareholder in Ueno Holding the previous month. ABC Color reported that his stake had amounted to 1.58% of the bank’s capital. The central bank said Carvallo did not take part in regulatory decisions concerning Ueno.
Eight banking executives were arrested. Ricardo Estigarribia, a presidential hopeful for the opposition PLRA, said the party plans to submit an impeachment request against Peña and Vice President Pedro Alliana. Alliana, who has been mentioned as a possible successor to Peña within the ruling Colorado Party, said the government should take a firm stance to punish those responsible and protect Ueno’s customers.
Sources: Folha Mercado.