Paraguay Begins Liquidation Proceedings for Major Digital Bank Ueno

[GuaraniGhost]

Paraguay Begins Liquidation Proceedings for Major Digital Bank Ueno

I am glad that I always advised clients to avoid this "institution".

I do not praise any Py bank, but this one had a lot of red flags along the way. It also has a bad reputation among people working in the sector, which isn't a determining factor, since these old banking clans don't like competition, but in this case, it is justified.

This fallout also has its precedent in a power struggle within the country's ruling "Colorado Party". The rising stars (tied to Ueno) challenged the old ruling class around former president Horacio Cartes. He showed them who rules the country.

It was the biggest bank by number of customers, but usually targeted unbanked, low-income people. By assets, it was top 7. Most customers will recover 100% of their balances under the BCP guarantee scheme (up to 25k USD).

The bigger issue is IPS (social fund) and other public institutions holding deposits worth a total of almost 1 billion USD.

The biggest risk is that distrust spreads through the system and people start withdrawing money en masse from other banks and financial institutions.

On the positive side, the dollar may finally start to recover against the guarani, and life gets cheaper for us.

 

[Mercado4]

Earthquake in Paraguay - first the bank, then the President

https://www.aljazeera.com/economy/2026/11/5/paraguay-president-pena-resigns-in-wake-of-bank-collapse

So one of the Paraguay's largest banks, UENO bank, supposedly a digital bank - never mind tens of brick and mortar locations they have in Paraguay, was shut down yesterday at the order of the Central Bank of Paraguay, as they were found to have less then 50% of the required cash reserves minimum. Per local press, they controlled about 10% of the banking market in Paraguay.

In theory, the National Deposit System guarantees each depositor 238 million Guaranies (approx. US$40,000) per deposit. In reality, it is more complicated. See below.

Turns out that Banco Ueno has recently raised US$350 million in foreign debt, and the word is (unconfirmed but coming from the inner circle of an opposition Senator) that the government has simply "borrowed" this money from the bank for the recent elections (and most likely improving the cash reserves of said politicians). There were local elections a month ago that the governing party won in a landslide.

Apparently, instead of returning the money, the government decided to declare the bank to be insolvent. Keep in mind that President of Paraguay, Mr. Santiago Pena had been a major stockholder in Banco Ueno.

Less then 24 hours later, Mr. Pena (also a puppet of Mr. Trump) , requested his resignation. As I write this, the opposition is trying to prevent his resignation. Why?
Because in Paraguay, if Mr. Pena resigns, he will have immunity for the rest of his life, rich pension etc. However, should there be a legal proceedings against him initiated prior to his resignation, he will likely go to jail and be forced to repay all the monies he had allegedly stolen.


As I write this, there are demonstrations in Asuncion calling for a legal proceedings to begin as soon as possible.

And in terms of the refund of the money that small depositors had, last press release from Banco Central says that they will begin to deposit money to the former clients of Banco Ueno so long as
- they have account in another bank
- they have no debts to Banco Ueno
- they have less than 10 million Guaranies (approx. US$1,600) in their account.

While this is a far cry from the abovementioned 238 million, at least it is a step in the right direction.

If the customers do not have any other bank account, Banco Central will create an entity to take care of that - but no further details provided.

Stay tuned, I post more when I know more.

Cheers

Mercado 4

 

[Mercado4]

As of now, per local media, Mr. Pena remains the President of Paraguay. See above for context.