ASUNCIÓN — Paraguay’s central bank has taken over Ueno Bank, the country’s largest digital lender, leaving nearly 3 million customers unable to withdraw or transfer funds. The central bank’s president resigned and prosecutors moved against the bank’s top executives as protesters gathered in the capital demanding their savings and the removal of President Santiago Peña on Tuesday evening.

The Takeover

The central bank’s board voted unanimously late Monday, November 2, to place Ueno in resolution. Officials took control on Tuesday. The trigger was a collapse in Ueno’s solvency ratio to less than half the legal minimum. La Nación put the ratio at 5.56% against a 12% requirement.

The central bank had warned Ueno in June that it was lending too heavily to companies tied to its owners. Days before the seizure, Ueno had announced a US$100 million capital raise. The bank’s app, cards and transfers were frozen, and customers gathered outside closed branches guarded by police, the AP reported.

Ueno says it has about 3 million customers, roughly 60% of Paraguay’s adult population. La Nación reports about 2.9 million. The bank manages between US$800 million and US$850 million in public money, including about US$380 million from the state pension and health fund IPS, according to the AP and Reuters.

IPS says pensions will be paid normally. It is moving about 32,000 retirees who collect through Ueno to another bank, and it plans legal action to recover its investment.

What Depositors Can Expect

A central bank guarantee fund covers up to 228.3 million guaraníes (about US$38,000) per person. Preliminary estimates say this fully covers about 97% of depositors, around 2.8 million people.

About 87,000 savers with larger balances may face difficulty recovering the excess, La Nación reported, although that doesn’t necessarily mean losses.

The regulator has promised only “the greatest possible protection” for those balances.

Payouts are due within 15 days of the takeover, extendable once. The AP reported that depositors would first receive up to 10 million guaraníes (about US$1,700), minus any debts to Ueno, with no date given.

Peña said he has agreed with congressional leaders to fast-track legislation to speed payouts and the return of public money.

Arrests & Asset Freezes

Prosecutors ordered eight arrests, including Ueno President Juan Manuel Gustale and Federico Miguel Vázquez Villasanti, the founder and head of Grupo Vázquez, which owns Ueno, according to the AP and La Nación.

Two more directors were in custody by Tuesday afternoon, the AP reported.

The investigation covers alleged breach of trust and possibly other offenses, based on a complaint from the central bank. Courts ordered preventive seizures of US$70 million and 1.62 trillion guaraníes in assets of directors and shareholder companies, La Nación reported.

Central Bank Chief Out

Central Bank President Carlos Carvallo resigned Tuesday at Peña’s request. He will stay temporarily to oversee the transition, the AP reported. Carvallo previously chaired Financiera Ueno, the predecessor of Ueno Bank, from 2021 to 2023 before Peña appointed him to run the central bank.

Critics raised conflict-of-interest concerns from the start. The central bank says he recused himself from Ueno decisions. “The central bank needs calm to do its job,” Carvallo said. Liana Caballero has reportedly been named as interim head.

Political Fallout

Peña was a business partner of Grupo Vázquez until March 2025, according to the AP, and reportedly held shares in Ueno Holding until late that month, per ABC Color filings. He denied in April 2025 being a shareholder or investor in the bank itself.

Government agencies and state funds deposited heavily in Ueno. Peña previously dismissed concerns about the bank’s finances, canceling a trip to a summit in Spain and called the case specific to Ueno, not a banking-sector crisis. He vowed those responsible “will have to answer to the courts, without exceptions or privileges.”

Hundreds of protesters gathered in central Asunción on Tuesday evening, near the National Pantheon of Heroes, the presidential residence and Congress.

Opposition senator Rafael Filizzola confirmed that an impeachment motion against Peña is being drafted. Peña’s Colorado Party controls both chambers, so the motion faces steep hurdles.

Party vice president Rodolfo Friedmann called for his expulsion, the AP reported.