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.

 

[jafo]

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

Still? On Saturday, November 7th is he still President?

PS. BTW, great write-up from all involved here. Much better than reading it on X

 

[JohnnyDoe]

Why should anyone keep more money than a couple weeks' planned expenses in a shitty Paraguayan bank?

 

[Mercado4]

As of yesterday evening, Senate voted unanimously to depose the president, and subsequent to it, an arrest warrant had been issued for ex President Santiago Pena. As of this writing, Mr. Pena has surrendered and is submitting his defense while the government is demanding his preventive detention. Same story is with the ex president of Banco Central Paraguay. Santiago Peña y ex presidente del BCP son imputados por Fiscalía con pedido de prisión preventiva

 

[Mercado4]

Why should anyone keep more money than a couple weeks' planned expenses in a shitty Paraguayan bank?

I am not going to advocate for Paraguay banks, they are all horrible and absolutely unreasonable in terms of dealing with clients, especially foreigners - that is unless you carry a suitcase with millions of dollars in cash, then it is no problem. I had dealt previously with Canadian, US, Hong Kong, and European banks and while none is particularly great, Paraguay banks are in the class of their own.

However, I think it is not just Paraguay banks.. Credit Suisse anyone? I believe that it will become harder and harder to withdraw your money from the banks, and even harder to move them internationally as our respective governments are becoming more and more desperate for any income.

 

[JohnnyDoe]

it will become harder and harder to withdraw your money from the banks, and even harder to move them internationally

This. It’s already happening and becoming worse every day.
But we know the solution!

 

[Mercado4]

Preventive detention for both - ex president of Paraguay and ex president of the Central Bank - has been granted and as per press, they are in jail already.
Judge also froze all assets of ex president Mr. Santiago Pena.

 

[Paratore]

I read that Ueno was 10% of the banking sector in Paraguay and that several state owned operations had filed suit to recover cash reserves. The Guarani was down 8% against the dollar (still up about 15% on the year). Any feel for whether this will become a widespread crisis of finance down there?

 

[Mercado4]

I wish I could tell you, but I do not know. Unless World Bank starts pushing for higher taxes (Paraguay has by far the lowest taxes in Latin America - personal tax is 10% on income above 80 million Guaranies (approx. 13,000 US$) and corporate tax is 10% - Paraguay will likely remain a favorite destination for a while. If anything, this shows that there are limits to government corruption.

Guarani has appreciated very well against US$ and Euro and now it giving up some of the gains, but not all that much.

UENO had almost $1 billion dollars of deposits, big chunk of it by the State Pension Fund IPS. They had promised that all retirees would be paid on 17th November. We will see.

The country's economy is agriculture and hydropower. In both food and energy, country is more than self-sufficient (Paraguay has about 7 million inhabitants and feeds 70+ million people). Same with hydro - until Three Gorges, Itaipu was the largest hydro in the world, and approximately 72% of the power generated goes to Brasil and Argentina. In other words, country is self-sufficient in basic necessities. This is one of the reasons I chose to live here.

However, as for possible machinations of World Bank or other financial criminals (err, read entities) it is really hard to say. Hope this helps.