Why is there a 'corralito' in Paraguay?

BarcelonaThe 2.9 million clients of Ueno Bank, one of the most popular financial institutions in Paraguay, are experiencing the uncertainty of a corralito that has blocked their savings and pensions. The bank's collapse has simultaneously caused an earthquake in the country's government, given the business ties of President Santiago Peña, who has resigned, with the bank. These links have triggered an impeachment trial against the far-right leader, a friend and ally of Vox leader in Spain, Santiago Abascal. A tweet from the president's daughter, Constanza Peña, wearing a t-shirt calling for taxes to be imposed on the poor, has also sparked controversy.

The country's central bank ordered the initiation of a resolution procedure for Ueno Bank on Tuesday, after detecting that its solvency had fallen below the legal 50%. This has resulted in the freezing of deposits and the closure of all branches in the country.

The entity began its activity as a bank in November 2023, three months before the arrival of the Peña administration. Through an intense digital strategy, it became one of the most popular financial institutions in the country, reaching 2.9 million clients by last June in a country of 6.1 million inhabitants. Furthermore, two out of every three electronic transactions are made through Ueno Bank, according to the Association of Importers and Merchants of Paraguay (Asimcopar).

Pensions

The main impact on public finances is centered on the Social Security Institute (IPS), which manages the pension system for most of the country's workers and holds investments of approximately 355 million dollars in Ueno. This sum is equivalent to about 9% of the total portfolio.

The official body has placed its resources in savings deposit certificates and bonds, and holds in the affected bank the deposits of some 32,000 retirees, for whom it manages the payment of benefits. The bank also holds resources from other public entities.

According to Efe, among those affected are also athletes, such as players from the Paraguayan national soccer team. The resolution process provides for activating the deposit guarantee fund mechanism, which covers up to 75 minimum wages or the equivalent of about 38,600 dollars.

The crisis has also led to criminal investigations against those responsible for the entity. The Prosecutor's Office ordered the arrest of its executives, including Miguel Vázquez, one of the founders and main shareholders of Ueno Bank, and opened an investigation into the circumstances surrounding the collapse of the bank.

President Peña ended up at the center of the storm because he was a shareholder of Ueno Holding, a conglomerate owned by the Vázquez Group, which includes companies such as Ueno Bank, although he sold those shares in March 2025. This is one of the main arguments for promoting the impeachment of the head of state.