Ueno Bank failure forces Paraguay president to resign

Paraguay President Santiago Peña was removed from office on Friday after the sudden failure of Ueno Bank triggered a national financial crisis. The bank stopped processing customer services early Tuesday, a disruption that quickly evolved into a political showdown. By Saturday, authorities reported that nearly 1.2 million customers had received advance payments through the state deposit guarantee fund, though many others continued to wait for their money.

Ueno reported a customer base of 2.9 million people, which equals about 60% of the country's adult population. The Central Bank placed the number of depositors at approximately 1.8 million. On Friday, hundreds of demonstrators gathered outside the Congress building in Asunción. They demanded access to their funds and accountability for the failure. Batarram Caballero, a biochemistry student and president of the student center at the National University of Asunción, said classmates lost access to cash needed for food and bus fares.

The institution began as a fintech startup in 2021 and launched banking operations in November 2023. It grew rapidly by using digital tools and offering cashback rewards. It also attracted large public investments. The Social Security Institute, known as IPS, held about $355 million in Ueno, representing roughly 9% of its portfolio. This level of public exposure raised questions about the bank's stability before the collapse.

Lending practices became a focal point for critics. Manuel Ferreira, an economist and former finance minister, told ABC Color that promotional spending attracted customers but did not create lasting assets. He noted that loans are a bank's main asset and pointed to Ueno's lending to businesses connected to its controlling owners, Grupo Vásquez. Three companies linked to that group received $146 million in loans. Ferreira said some promissory notes showed the same people signing on both sides of transactions.

Peña's personal ties to the bank intensified scrutiny. His 2023 asset declaration, filed weeks after he took office, listed shares in Ueno Holding valued at about $845,000. Those shares represented around 1.6% of the paid-up capital when he sold them in March 2025. He also appointed former Ueno leader Carlos Carvallo to head the Central Bank in 2023. Prosecutors allege that Peña used his position to influence public agencies to keep deposits at the bank.

Peña resigned on Thursday and faced impeachment on Friday. Prosecutors charged him on Saturday with breach of trust and administration for personal gain. He pleaded not guilty and was ordered into pretrial detention at a military facility. Vice President Pedro Alliana has been sworn in to serve the remainder of the presidential term, which ends in August 2028.

Carvallo was arrested and charged with breach of trust, administration for personal gain, and producing false public documents. A judge ordered his pretrial detention at a police facility. Eight other Ueno executives were also arrested and charged. Among them is Miguel Vásquez, the 36-year-old chief executive of the bank.