Paraguay’s largest bank closed in a morning: 3 million without access
Three million people banked there and $2.8 billion in deposits sat on its books when the supervisor found a solvency ratio of 5.56 percent. The fund that now pays them was designed in 2003, for a banking system in which no single institution carried one of every three transfers.
On Nov. 2, 2026, the board of the Central Bank of Paraguay (BCP) voted unanimously to open a resolution procedure against ueno bank, the country’s largest bank by number of clients, after establishing that its solvency ratio had fallen below half the legal minimum. The decision was announced at a press conference at 7 a.m. the next morning, and it shut everything the institution operated: the app, the cards, the branches, the transfers. “Neither the app, nor the cards, nor any service of the entity is active from this date on,” said Liana Caballero, a member of the central bank’s board, at that press conference. Clients were told they would not reach their money for at least 15 days.
The fall was fast and it was measured. The supervisor put the solvency ratio at 5.56 percent against a regulatory floor of 12 percent, after accounting adjustments of more than 1.6 trillion guaraníes — about $270 million at the exchange rate the central bank used to price the deposit guarantee — and after the bank failed to restore a legal reserve requirement of $70 million. Deposits totaled $2,836 million in September, and 97 percent of the depositors sat below the guaranteed ceiling.
Resolution is the procedure Paraguay uses in place of judicial bankruptcy: the regulator takes the institution, freezes assets and liabilities, pays savers through the Deposit Guarantee Fund (FGD) and liquidates what remains. The ceiling is 75 monthly minimum wages per person, natural or legal, in each financial institution, which the central bank priced at 228.3 million guaraníes, about $38,600, and the guarantee applies per depositor and per institution, not per account. Applied to ueno’s books, it covers some 2.8 million people in full. The other 87,000 hold balances above the line, and their recovery depends on what the liquidation produces; a first payment of up to 10 million guaraníes, about $1,675, was promised shortly.
What failed is not a marginal institution. ueno bank had more than 3 million clients, a figure the bank itself equates to 60 percent of the adult population, and 1.2 million of them opened their first bank account there. It processed more than 70 million banking transactions a month, more than 3 million in a single day, and one of every three transfers made in Paraguay passed through its systems. The central bank had designated it one of the country’s four systemic banks.
That scale came from a merger and was financed from abroad. In March 2026 the bank placed $350 million in international bonds, the largest issue of the kind by a Paraguayan bank, and it had raised more than $510 million in financing from global institutions. Ten days before the resolution, ueno announced a $100 million capitalization plan in two tranches of $50 million, one from its controlling shareholder, U Holdings S.à r.l., a company it incorporated in Luxembourg in 2023, and one from a share issue reserved for Paraguayan private investors. The plan would have taken Tier 1 capital from 11.7 percent to 14.9 percent, above the 8 percent and 12 percent minimums. The money did not arrive in time.
Fitch had flagged the problem three weeks earlier. On Oct. 16, 2026, the agency affirmed ueno’s long-term rating at BB and cut the outlook from stable to negative, citing rapid balance-sheet growth and a high level of intangible assets that had reduced the bank’s capacity to absorb losses. To return to a stable outlook, Fitch wrote, the bank needed to restore its Fitch Core Capital ratio above 13 percent on a sustained basis. In the same report the agency raised its government support rating for ueno to bb- from b+, on account of the bank’s greater systemic importance, and noted that its loan book had grown 30 percent in the first half of 2026, the period in which it completed the absorption of Visión Banco.
The bank came out of a family group that began in commerce and car dealerships. Grupo Vázquez traces its history to a mechanical workshop opened in a working-class neighborhood of Asunción in 1945 and to Cóndor, the Mercedes-Benz representative in Paraguay since 1951; the financial arm, Credicentro, was founded in 1984 by Víctor Hugo Vázquez. Credicentro made its first share issue on the Asunción exchange in 2012, carried out in 2020 the first triple merger of listed companies in the Paraguayan market, bought Financiera El Comercio in 2021 and turned it into Financiera ueno, took the name ueno Holding in 2022, and in 2024 absorbed Visión Banco, which made it the largest bank in the country by clients and by active credit cards. The group reports more than 20 companies and 5,500 employees.
The central bank’s account of the failure concerns the balance sheet rather than the strategy. Its communiqués attribute the collapse to accounting adjustments applied to the bank’s financial statements during the regularization regime and to credit granted to companies linked to the group’s owners. The BCP filed a criminal complaint, and the Prosecutor’s Office ordered the detention of eight executives and directors, among them Miguel Vázquez Villasanti, the group’s principal figure and the bank’s first vice president, and Juan Manuel Gustale Cardoni, its president. The courts ordered preventive seizures of $70 million and 1.62 trillion guaraníes over the assets of the detained executives and of the shareholder companies, including U Paraguay, U Holdings and Grupo Vázquez.
What turned a bank failure into a national problem is what the institution was holding for the state. It administered between $800 million and $850 million in public funds. The Instituto de Previsión Social (IPS), the pension and health fund, had $355 million placed in ueno, about 9 percent of its portfolio in certificates of deposit and financial bonds, according to its investment director, Hugo Díaz, and the bank processed the pensions of some 32,000 retirees; money from the National Electricity Administration (ANDE) and from the Itaipú dam was also there.
The political cost arrived in the same week. President Santiago Peña held shares in ueno Holding until March 2025, when he left the company, and in 2023 he appointed as president of the central bank Carlos Carvallo, who had run Financiera ueno before it became a bank. Carvallo presented his resignation at Peña’s request on the day of the resolution, and Liana Caballero took over in the interim. Opposition sectors opened the path to an impeachment trial against Peña and Vice President Pedro Alliana; the president canceled his trip to the Ibero-American summit in Madrid; and the government announced it would push through Congress a law to accelerate the use of the guarantee fund.
Paraguay has been here before. In 1995 the collapse of Banco General and Bancopar followed the discovery of savings portfolios kept off the books and of loans the banks made to their own owners; the crisis returned in 1997 and 1998 and dragged down Banco Unión, Oriental and the Banco Nacional de Trabajadores. The response was Law 2334, of Dec. 12, 2003, which created the guarantee fund with coverage of 75 minimum wages per person and per institution and has been financed since then by quarterly contributions from the banks themselves. At the end of 2024 the fund held $1,110.9 million, 2.5 percent of Paraguay’s gross domestic product.
Jorge Schreiner, an economist and lawyer who sat on the central bank’s board through both crises, disputes how the fund is being presented now. “It is not a guarantee fund,” he said. “Each depositor contributes 0.25 percent of each deposit, and it becomes deposit insurance. If it were a guarantee, it would sit as a subsidiary role of the state.” The mechanism, in his reading, was built to protect small savers, the roughly 90 percent whose balances sit below 10 or 15 million guaraníes, and it was never meant for large depositors. Using it to replace the public money that was in the bank, he argues, shifts the loss onto the people who fund it.
The two failures differ in where the rot sat. The banks of 1995 hid deposits in a second set of books; the present collapse, according to the Central Bank of Paraguay, came from adjustments to statements filed under supervision and from credit to related companies. The arithmetic of who pays did not change. A fund built from the contributions of the depositors of every bank in the system, sized at 2.5 percent of gross domestic product, now faces a single institution with $2.8 billion in deposits and a payments franchise that no other bank can absorb overnight.
The guarantee returns the balance to the saver. It does not put the payment system back to work, and it does not answer for the public money that shared the same balance sheet.
Paraguay built, after the 1990s, a mechanism that keeps a small saver from losing his savings when a bank falls, and it is working as designed: 2.8 million people will be paid. The other half of the defense was never built. Nothing stopped the pension fund of the entire country from placing 9 percent of its portfolio in one private bank, nothing provided for the transfers it carried to keep moving while the savers waited, and nothing separated the supervision of the institution from the man who had run it. The resolution of ueno bank will settle the accounts. The three gaps it exposed stay open, and the next bank to fail inherits them.