Ueno Bank’s collapse has frozen deposits belonging to thousands of customers and organizations in Paraguay, threatening emergency services and raising concerns about other public funds. (Foto: Instagram)
The collapse of Ueno Bank, Paraguay’s largest digital bank, has left thousands of customers unable to access deposited funds and is beginning to affect public services. The crisis also led to the removal of President Santiago Peña, while the government has warned that disruptions could spread as institutions seek access to money held at the bank.
Paraguay’s Central Bank dissolved Ueno on Tuesday, Nov. 3, after finding that its solvency had fallen to less than half the required level. The bank had 2.9 million customers—about 40% of the country’s population. Prosecutors accuse the company of manipulating the bank’s financial position to make its operations appear credible and of providing loans and other concessions to businesses linked to its controlling group. Peña held a stake in that group until last year and is under criminal investigation over alleged involvement in the scandal.
The Volunteer Fire Department of Paraguay is among the first organizations to report operational consequences. Because firefighters in the country are volunteers rather than government employees, the department depends on its own resources to provide emergency services. The national fire department said about 2 billion guaranis raised in its most recent collection—approximately $313,000—are frozen at Ueno, along with funds belonging to local stations. Its leadership said the restrictions threaten stations’ ability to operate and maintain emergency services. It is seeking guarantees that the money will be protected from any forgiveness, conversion, restructuring, or delay that could limit its availability. The Paraguayan newspaper ABC reported that the station in Itá had only one vehicle in service on Friday, Nov. 6.
The Paraguayan Social Security Institute, which manages the country’s pension system, has about $355 million deposited at Ueno, equal to 9% of the government’s total pension fund, according to the institute. Its board member Mirtha Arias said the crisis would not prevent benefit payments and that pensioners would be paid in full on Nov. 17. The institute is seeking to recover the frozen funds through the Central Bank and has submitted documentation to protect them. It also says it is working to move the accounts of 32,000 retirees who received payments through Ueno to other banks.
The state-owned National Electricity Administration, known as ANDE, also had funds at the bank. Its president, Miguel Baéz, told Paraguayan media that the agency had deposits connected to loans from the Inter-American Development Bank and Taiwan. ANDE has asked the Central Bank to give its funds special treatment. Baéz also said the crisis could affect the agency because some electricity customers use Ueno’s apps to pay their bills.
The political fallout extended beyond Peña’s removal. The Chamber of Deputies unanimously opened impeachment proceedings on Thursday, and the Senate voted to remove him on Friday. The National Police arrested Peña at his home in Asunción on Friday night, according to the report. Vice President Pedro Alliana, a member of the same Colorado Party, was expected to take over the executive branch. Javier Giménez, head of Peña’s presidential office, and presidential legal adviser Roberto Moreno left their posts Friday. Central Bank director Carlos Cavallo resigned Wednesday, and Interior Minister Enrique Riera resigned Thursday.
