Paraguay Seizes Ueno Bank Amid Political Crisis

The Central Bank of Paraguay seized Ueno Bank on Tuesday after the digital lender's solvency ratio fell below half the legal minimum. The takeover froze assets and liabilities for approximately 3 million customers—roughly 60% of the country's adult population—and suspended all banking services, including apps and cards. The bank held between $800 million and $850 million in public funds, including $380 million from the state pension and health fund.

Investigations revealed improper and excessive lending to companies tied to the bank's owner, Grupo Vázquez. Prosecutors arrested ten people, including Ueno President Juan Manuel Gustale and CEO Federico Miguel Vázquez Villasanti, on suspicion of breach of trust and financial crimes.

The collapse sparked a political crisis for President Santiago Peña, who was a business partner of Grupo Vázquez until March 2025. Opposition senators are pursuing impeachment proceedings against Peña and Vice President Pedro Alliana over the handling of public money. In response, Peña requested the resignation of Central Bank President Carlos Carvallo and announced an agreement with congressional leaders to fast-track legislation allowing the national Guarantee Fund to reimburse depositors.

Carlos Carvallo submitted his resignation on November 3 but remains in office to oversee the resolution proceedings. While 97% of depositors are estimated to be covered by insurance up to approximately $38,200 per customer, those with larger balances face uncertainty. Both the central bank and the presidency maintain that the collapse is an isolated case rather than a systemic failure of the national financial system.