Imagine waking up, opening your banking app, and finding nothing. No transfers, no card, no branch down the street. That's what millions of Paraguayans woke up to this week, and the fallout now reaches all the way to the presidential palace.
What Happened
Paraguay's central bank, the BCP, seized Ueno Bank, a major digital lender, on Tuesday, November 3, AP reports. According to AP and the Asunción Times, the bank's board voted unanimously late Monday to put Ueno into resolution after its solvency ratio fell below half the legal minimum.
ABC Color reports the resolution process began in the early hours of Tuesday. Disruption Banking reports that Ueno's app, cards and transfers went offline overnight.
The scale is massive. AFP, via France 24, reports that nearly half of Paraguay's 6.4 million people have an account at Ueno and that around three million people had deposits frozen. Colombia's El Tiempo puts the number of affected customers at 2.9 million. AP says the takeover left millions of customers' savings, and hundreds of millions of dollars in public funds, in limbo.
The Central Bank Chief Is Out
The scandal has hit the regulator itself. Reuters reports that central bank president Carlos Carvallo submitted his resignation Tuesday at President Santiago Peña's request.
The awkward part: Carvallo used to run the lender. According to the Asunción Times, he chaired Financiera Ueno, the finance company that later became Ueno Bank, from 2021 to 2023, before taking over the BCP in August 2023.
"Stepping aside will help to quell the controversy surrounding the BCP," Carvallo said at a press conference, per Reuters. He said he'd stay on temporarily while the resolution process continues.
The President's Ties
AP describes Ueno as having close ties to Peña. Reuters reports that Peña was a business partner of the group that owned the bank until March 2025. El Tiempo reports Peña calls it "a particular case," and that he canceled his trip to the Ibero-American Summit in Madrid.
Arrests and Charges
Prosecutors ordered eight people linked to the bank detained on Tuesday, according to Reuters and ABC Color. Among them are CEO Federico Miguel Vázquez Villasanti and bank president Juan Manuel Gustale. ABC Color reported seven were in police custody by Tuesday.
Prosecutor Francisco Cabrera said investigators are looking at conduct that could amount to breach of trust and fraud, among other offenses, the Asunción Times reports. Última Hora reports a judge has since admitted charges against Vázquez and 26 other people. Those charges include breach of trust and attempted fraud.
The Asunción Times notes that a detention order is not a finding of guilt. A civil judge also froze assets linked to the bank's owners and directors, up to about $70 million, per the same outlet.
"Give Us Back Our Money"
Paraguayans took to the streets. AFP reports hundreds of protesters gathered in Asunción for a second night Wednesday, chanting "give back our money" and "trial for Santi Peña." Earlier in the day, customers lined up outside Ueno locations hoping to reach their deposits.
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ABC Color says the crowds included savers, retirees, students and workers, and that they gathered around the Panteón de los Héroes demanding the impeachment of Peña and Vice President Pedro Alliana.
Impeachment on the Table
Opposition lawmakers have filed an impeachment request against Peña and Alliana with Congress, AFP reports. Última Hora says the request carries 35 signatures and focuses on Peña's political responsibility in matters tied to Ueno, including its business links, investments by the national social security institute (IPS), and how regulators performed.
Lower house president Raúl Latorre called an extraordinary session for Thursday morning to take it up, according to Última Hora.
Is the Money Gone?
Not necessarily. El Tiempo reports that Paraguay's deposit guarantee fund covers up to 75 minimum wages per person, roughly $38,600. The central bank says frozen depositors "will receive a first payment of up to 10 million guaraníes," about $1,675, per AFP. Última Hora reports those payments start Thursday and should be finished within five business days.
AP also reports the central bank on Wednesday temporarily suspended withdrawals from certain mutual funds linked to Ueno. Disruption Banking reports the BCP has said repeatedly that the problems are confined to Ueno and do not threaten the wider financial system.
The Bottom Line
The internet is already calling this a warning about digital banking. On the ground in Asunción, it's simpler than that. People want their money, and they want answers from the government that was supposed to be watching the bank. Thursday's impeachment session could decide how much bigger this gets.
