Paraguay bank crisis sucks life out of bustling market

Asuncion: Maria Martinez, who rises at 3am every day to sell fruit, chemicals and more from a market in Paraguay's capital, says sales have hit rock bottom since Ueno Bank's demise.

"People don't come because there's no money. It's all gone," the 50-year-old told AFP, her voice trembling with anxiety.

The November 3 collapse of one of the country's largest banks "hit humble people like us very hard," she said.


The aroma of vegetables, meats and herbs punctuates Asuncion's main market, a sprawling, multi-colored labyrinth of over 20 hectares (50 acres) known as "Mercado 4."

Read more: How a digital bank's collapse toppled Paraguay's president Santiago Pena

One sweltering afternoon, almost 3,000 vendors selling everything from cell phones to sportswear stood ready to receive customers.

But barely anyone showed up.

"Many customers have been left with nothing," said Martinez, adding that while most prices have remained stable since disaster struck, others have jumped.

'Heart of Paraguay'

Ueno began as a small fintech company and rapidly morphed into a major bank handling state pensions and the accounts of several government entities.

Its seizure amid insolvency concerns has therefore thrown the usually stable country into turmoil, with tens of thousands of people locked out of their bank accounts.

Read more: Paraguay's ousted president faces prosecutors after his removal over bank collapse

Ueno's collapse sent thousands of angry depositors into the streets and led to the impeachment and arrest of president Santiago Pena, who is accused of using his position to illicitly benefit the bank.

On Wednesday, the central bank said it had partially returned savings to all affected depositors, but the move has yet to provide relief to Mercado 4.

"There used to be a lot of people here. This is the heart of Paraguay, and now look: nothing," said Leongino Johnes, who has bought market products to sell them at an Argentine border crossing since 1992.

"This is going to get worse because the end of the year is coming," Johnes added. "People are getting desperate. Everyone is getting nervous."

Cash is king

The 2012 film "7 Boxes," Paraguay's highest-grossing production, was shot in Mercado 4 and tells the story of a young delivery boy.

Not much has changed since. Carts loaded with boxes trundle through the jumbled stalls -- now with much more ease given the lack of crowds.

Other habits have changed over time, however, such as a huge preference for digital payments and the subsequent disappearance of cash.

"Seventy percent (of payments) were transfers from Ueno," according to Martinez.

After the traumatic week Paraguay has endured, the stall owner says she would rather "not sell than accept bank transfers."

Ueno claimed to have over three million customers, which amounts to almost half the population of the South American nation.

Its digital-first model attracted many people including low-income clients.

Bank notes are circulating more frequently following the bank's implosion.

"All of a sudden a few of them showed up, but they were all torn," clothing and accessories vendor Rita Gomez told AFP.

A nearby stall sells football jerseys sponsored by Ueno, to the disgust of people working nearby.

How to make a living?

Official reassurances about reimbursements have not landed well in the lifeless market.

"I figure those who got their refunds had to pay off the bills they were behind on," said Gomez.

Ueno's takeover prompted a pullback in consumer spending spread across Paraguay.

Stores selling imported products reported sales drops of up to 70 percent, while supermarkets recorded an initial decline of between eight and ten percent, industry data shows.

Uncertainty pushes people to "avoid expenses that aren't strictly necessary, and that obviously affects consumption," financial analyst Amilcar Ferreira told AFP.

The situation has understandably provoked massive concern among those trying to make a living.

"Before the day even starts, you already have to pay for your stall," Gomez said. "If you're not selling, what money are you going to use to pay?"

Martinez said she will keep getting up at dawn, even if "nothing is resolved."

"We're in total chaos," she said.