A sudden blank screen startled almost three million Ueno Bank customers in the early hours of Tuesday 3 November. At around 03:24, the app of the Paraguayan institution, a key player in the system that manages multimillion-dollar state funds and has grown at breakneck speed in its three years of existence, stopped displaying users’ accounts and showed a single message: “We cannot display the balance”.
At the same time, the Central Bank of Paraguay issued a tough statement on its social networks: the institution was being taken over and its liquidation process was starting. This “resolution procedure” against Ueno Bank was triggered by a major financial alarm, after a critical collapse in its solvency ratio had been detected, falling below 50%.
The impact was immediate and set off an unprecedented political earthquake for the government of Santiago Peña. Since Tuesday, crowds of outraged users have converged on the headquarters in Asunción and the bank’s 75 branches across the country, trying to save their money.
The scene outside the premises, closed and guarded by security staff, has turned into one of extreme tension and utter desperation. The anguish at the doors of the branches translated into everyday emergencies that had become impossible to handle. Some, in tears, begged to withdraw their funds to pay for medicine for a seriously ill child; a few kilometres away, a construction worker was equally distraught when he saw that, without access to his savings, he would not even be able to buy food for his children that day.
The spectre of a corralito
The bank held around 850 million dollars (about 758 million euros) in public funds, including resources from the Social Security Institute that underpin pensions and healthcare for workers. The spectre of an Argentine-style corralito immediately set off alarm bells among the population. “Who will answer for a lifetime of savings? Will there be impunity?”, read the placards held by protesters standing their ground outside the branches.
The whole country held its breath as it awaited the press conference of the Central Bank of Paraguay (BCP). The official confirmation was categorical: “We proceeded to close the institution; neither the app, nor the cards, nor any service is active as of today”, declared board member Liana Caballero. The authorities’ attempts to calm tempers by reminding people that the law provides for a guarantee fund that will reimburse each customer up to 75 minimum wages (around 228 million guaraníes or 37,700 dollars, about 33,620 euros) were in vain; mistrust and suspicion had already completely taken over the streets.
Impeachment bid against Peña and mounting legal pressure
The political opposition points to the BCP’s leadership as complicit in the fraud through omission, but the coup de grâce is aimed squarely at the head of state. Santiago Peña is now in the eye of the storm: at the request of 35 legislators, the Chamber of Deputies will meet tomorrow in an extraordinary session to vote on whether to launch impeachment proceedings against him. The viability of the process will depend on securing 53 votes in the lower house and, subsequently, the backing of two thirds of the Senate.
The bill of indictment accuses Peña of “poor performance of his duties”, supported by serious charges ranging from conflict of interest and the alleged embezzlement of pension funds to institutional protection for the Central Bank. In the middle of the storm, the president cancelled his entire official schedule on Wednesday and opted to remain silent until late in the afternoon, when he reappeared online to announce the departure of the head of the central bank and demand that the courts establish responsibility.
The legal net closed in on Wednesday with the arrest of eight senior executives of the bank, including its chief executive officer, Miguel Vázquez. At the same time, the knock-on effects quickly hit the real economy: the Association of Importers and Traders warned of an immediate 35% slump in sales at the country’s major retailers. With money blocked and inaccessible, domestic consumption ground to a halt overnight.
Football, advertising and an inevitable collapse
In a country of just over six million inhabitants, the Ueno Bank app reached far beyond the strictly financial sphere. Owned by the influential Grupo Vázquez and instantly recognisable for its unmistakable fluorescent green look, the bank boasted that it had buried the heavy bureaucracy of the traditional agricultural and livestock-based republic. Its presence was ubiquitous in the media and in the sponsorship of the country’s most important football clubs, such as Cerro Porteño and Olimpia, as well as the emblematic Defensores del Chaco stadium.
Only a few days ago, the bank was boasting of an ambitious 100 million dollar capitalisation plan. However, behind the advertising façade and sporting patronage, the Superintendency of Banks came up against a stark and unsustainable balance sheet reality: the bank was unable to meet a mandatory reserve requirement of 70 million dollars (62.427 millones de euros) demanded by the central bank. The financial collapse was a matter of numbers; the political explosion that followed was pure gunpowder.
A technocratic economist and former official of the International Monetary Fund, Santiago Peña came to power in 2023 pledging to turn the country into a magnet for foreign capital. Although under his leadership Paraguay has posted one of the strongest economic growth rates in South America, the sudden banking collapse has left the president facing the most critical moment of his term.