In November 2023, Grupo Vázquez, a business conglomerate with interests spanning virtually every sector of Paraguay’s economy, unveiled a new online bank intended to replicate the success of neobanks such as Revolut.
The venture, Ueno, grew at an extraordinary pace. In just three years, it went from being a complete unknown to becoming the institution where nearly three million Paraguayans, 60% of the adult population, deposited their money. That was the case until last Tuesday, when it suddenly collapsed.
Its rapid growth was fueled by an aggressive customer-acquisition strategy that at one point offered cashback of up to 40% on all purchases made with its credit card, as well as sports sponsorship deals that helped make the brand a household name. The model was entirely unsustainable. “It is the classic case of a disaster waiting to happen,” says former Paraguayan finance minister Dionisio Borda.
Ueno Bank was taken over by the Central Bank of Paraguay (BCP) last Tuesday. The regulator announced that it would immediately begin liquidation proceedings, and customers’ savings were frozen. Funds held in savings and deposit accounts will be covered by Paraguay’s Deposit Guarantee Fund, which insures up to 75 monthly minimum wages, equivalent to around 228.3 million guaraníes (about $38,000) per depositor. Repayment of deposits has already begun, although the process will be gradual. The bank held roughly $2.84 billion in deposits
The biggest challenge now, Borda tells EL PAÍS, is recovering the public funds deposited in Ueno. The bank’s growth was fueled by support from the central government, a scandal that led to the removal of president Santiago Peña last week after news of the collapse became public. The Paraguayan state had deposited as much as $850 million in public funds in the bank, including money from institutions such as the Social Security Institute (IPS), which administers the country’s social security system and pays pensions to 32,000 retirees. But the support Peña’s administration, an ally of U.S. President Donald Trump, provided to the company went far beyond that.
The bank’s major breakthrough came in 2024 with its acquisition of Visión Banco. The takeover, which allowed Ueno to expand from a purely digital operation into a physical banking network, severely undermined its solvency. “It was bought without having the necessary funds,” says Manuel Ferreira, who served as Paraguay’s finance minister from 2012 to 2013.
The Central Bank of Paraguay allowed the lender to spread the losses from the acquisition across its balance sheet over a 20-year period. Until then, the maximum period permitted for such operations had been five years. Both Ferreira and Borda directly accuse the regulator of negligence and complicity for failing to warn about the hole in the bank’s finances.
“There is an obvious conflict of interest,” says Borda, referring to Carlos Carvallo, the president of the BCP.
Carvallo went from being chairman of Ueno Bank to leading the country’s central bank. He has now been forced to resign, along with Peña, who appointed him and is currently being held in pretrial detention. Paraguay’s former president owned shares in Ueno until 2025, when he gave them up amid public pressure. Both men are now facing intense public scrutiny.
“Both Peña and the BCP executives must be replaced; it is the only way to gradually restore confidence in the system,” says Borda, who served two terms as minister, from 2003 to 2008 and from 2008 to 2012. “It was impossible not to see what was happening.”
Sources at the Paraguayan Banking Association (Asoban) said they had repeatedly raised concerns with the BCP throughout 2025 and 2026, urging regulators to examine practices that could pose risks to the financial system. Their main concern was allegedly irregular lending to affiliated companies.
The crisis extends beyond Ueno itself. According to a BCP investigation leaked to the media and known as the Rivarola Report, the bank granted loans to companies within the same business group without adequate guarantees and failed to properly account for them on its balance sheet.
“A furniture store that might generate $1 million in revenue was given a $60 million loan,” explains Ferreira.
The central bank ordered Ueno to restate its accounts. Once those adjustments were made, the bank’s solvency ratios fell below the required minimum, forcing regulators to intervene. The collapse has not only brought down Ueno Bank but has also dragged a number of affiliated companies into the crisis.
For Carolina Arévalo, Tuesday was doubly devastating: she lost not only part of her savings but also her job. Arévalo worked as a journalist for VMedia, a media group owned by Grupo Vázquez. That morning, she received a message warning that she would no longer be able to withdraw money from her Ueno accounts. A few hours later, the company informed employees that it was imposing a temporary suspension of contracts and salaries for an initial period of 90 days. According to Arévalo, the group’s headquarters was effectively emptied out that same day.
Asoban insists that Paraguay’s financial system remains sound and has ample liquidity. “The problem is contained,” it says. The industry group adds that other financial institutions are working with the BCP to fund advances from the deposit guarantee scheme. As for public funds deposited in the bank, it cautions that “it is still not possible to determine how much will be recovered.” According to Asoban, “that will depend on the results of the bank resolution process, which is still in its early stages.”
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