Ueno Bank’s Frozen Millions: Paraguay’s Never-Used Guarantee Fund Must Pay 3 Million Savers

On Tuesday morning Ueno Bank’s app went dark. Its cards stopped working and its transfers stopped moving, and by the time the central bank announced it had seized the lender, the branches had locked their doors with depositors lined up outside them. On Wednesday the rush to open accounts at other banks crashed those banks’ own apps. About three million people, roughly six in ten Paraguayan adults, had their money inside a bank that no longer worked. The first payments back start on Friday afternoon, from a guarantee fund that has never paid a claim.

The first payment is an advance on the guarantee. The central bank first said it would pay up to 10 million guaraníes, about $1,600, per depositor. Congress then passed a law on Wednesday raising the advance to up to 40 minimum wages, about 121.8 million guaraníes or roughly $20,000. The central bank said at a press conference on Thursday that the money would start reaching accounts on Friday afternoon. It goes first to the 1.6 million depositors who already hold an account at another bank. The central bank has already chosen which bank will pay each of them, and it is emailing them from fgdpagos@bcp.gov.py or letting them check on its website. Another 265,000 people have no account anywhere else, and the central bank will open one for them.

The guarantee itself covers deposits up to 75 minimum wages (228.3 million guaraníes, about $38,000) per depositor, and the central bank says that covers the full balances of an estimated 97% of depositors. That figure counts people, not money: it says nothing about what share of the cash in the bank sits under the cap, and the central bank has not said. Balances above the cap wait on the exclusion balance sheet, the accounting of what Ueno owns and owes. The law gives the central bank 15 days to complete it, to November 17, with one possible 15-day extension. For those balances the central bank promises only to seek “the greatest possible protection.”

Reports around the world have put the state pension fund’s money in Ueno at $355 million, and some at $380 million. The fund’s own press conference on Tuesday said the $355 million is its entire investment book, spread across 14 banks. Its investments director said Ueno won a place in that book in 2025 through a central bank tender, with no new money placed this year. The fund has not said how much of its money sat in Ueno alone. What it holds there amounts to 9% of its total portfolio, and it will not come back through the guarantee. The fund will claim it in court, as a creditor, and has put together a legal team to do it.

About 32,000 retired people were paid through Ueno, and the fund says they will be moved to other banks and paid on schedule, with the annual bonus on November 17. Their pensions do not come from the investments at all, the fund’s finance manager said. They come from workers’ and employers’ contributions, and the money for them is set aside whatever happens to the bank.

The fund has never paid. It was written into law in 2003, after a banking crisis that began in May 1995 with four banks seized, 13% of the system’s deposits, when Paraguay had no deposit guarantee at all. The state had to cover the deposits itself, at a cost of about 6% of GDP in that year alone. More banks failed in 1997 and 2002, and the law that created the fund was part of the rebuild. Its first payout goes to the customers of a bank that held about 9% of the country’s deposits.

The warnings were on the record for months. The central bank began a review of Ueno on June 5, and its inspectors found lending to companies tied to the bank’s owners, beyond what the law allows and without enough collateral. On September 30 the bank still reported a solvency ratio of 13.8%, above the 12% minimum. By October its bonds were selling off and Fitch had cut its outlook to negative. Fitch put the bank at default on November 4. The central bank was already defending its oversight to Reuters on October 22. That president, Carlos Carvallo, had run Ueno itself until August 2023, and he resigned on Tuesday at Peña’s request.

On Instagram, under a post about the closure, hugofernandezpy wrote, in Spanish: “Give the money back!!!! We are out of work and we have debts and commitments to pay and there is no way to pay because of Ueno.” The guarantee repays the balance in his account. His missed wages sit outside it. The severance the central bank says will be paid is for the bank’s own workers, on a separate track from the deposits. ale.derlis wrote, in Spanish: “And what about someone who wants to withdraw their money now, because it is not a bank that works well, I will only be left with 3,000,000, and the rest, how do I withdraw it?” That is the question the central bank’s payout portal is built to answer, and the answer turns on whether he holds an account at another bank.

mariabertass asked only when the money would be released, and whether anyone could let her know. The central bank’s answer is Friday for the advance and November 17 for the rest of the guarantee, but the emails telling each depositor where to collect it only started going out on Thursday. Peña, resigning, said it was never his intention to betray the trust placed in him. ale_alejandroramirez wrote, in Spanish: “We are Paraguayans, Paraguayans are workers and we want to work honestly and not be slaves to anyone, we want them to give us our money back.”

Peña resigned on Thursday and the lower house voted 78–0 to impeach him minutes later. The joint session of Congress that was supposed to accept or reject his resignation broke up without a decision after lawmakers walked out. He formally remains president while the Senate prepares a trial. The opposition wants the trial because a president who resigns becomes a senator for life, with the immunity that comes with the seat, unless impeachment removes him. The payout runs on a separate track. The resolution, the law and the fund belong to the central bank. The payments start Friday.

The central bank’s payout portal is live at bcp.gov.py/web/institucional/fgd-pagos, and the first emails telling depositors where to collect their money went out from fgdpagos@bcp.gov.py. The bank’s name had already been scrubbed from the national stadium.