The collapse of Paraguay's Ueno Bank has disrupted access to money for customers across the country and brought down President Santiago Peña. Services stopped early Tuesday, setting off protests and a political crisis. By Saturday, authorities said nearly 1.2 million customers had received advance payments through the state's deposit guarantee fund, while others continued to wait.
Ueno reported having 2.9 million customers, equivalent to about 60% of Paraguay's adult population. The Central Bank put its depositor count at approximately 1.8 million. Hundreds of demonstrators gathered outside Congress in Asunción on Friday, demanding access to their funds and accountability. Batarram Caballero, a biochemistry student and student center president at the National University of Asunción, said classmates had lost access to money needed for food and bus fares.
Founded as a fintech in 2021, Ueno began banking operations in November 2023. Its rapid expansion relied on digital convenience, marketing and cashback offers, allowing customers to open accounts by phone and rewarding payments through its platform. It also attracted substantial public investments. The Social Security Institute, or IPS, had approximately $355 million invested in Ueno, representing roughly 9% of its portfolio.
The bank's lending has become a central concern. Economist and former finance minister Manuel Ferreira told ABC Color that promotional spending could attract customers but did not build lasting assets. He identified loans as a bank's main asset and highlighted Ueno's lending to businesses connected to its controlling owners, Grupo Vásquez. Three such companies received $146 million in loans. Ferreira said some promissory notes involved the same people signing on both sides of transactions.
Peña's ties to Ueno intensified scrutiny. His 2023 asset declaration, filed weeks after he became president, included shares in Ueno Holding valued at about $845,000. The shares accounted for around 1.6% of 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 Peña used his presidency to influence public agencies and state-owned entities to keep deposits at the bank.
Peña resigned Thursday and was impeached and removed Friday. Prosecutors charged him 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 complete 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 Ueno executives, among them 36-year-old chief executive Miguel Vásquez, were also arrested and charged.
The turmoil revealed tensions between Peña and former president Horacio Cartes, who had selected him to represent the Honor Colorado faction in the 2023 election. Their relationship had grown strained, apparently over Peña's attempts to build his own political base. Senators aligned with Cartes requested information about Ueno in September. After the collapse, Cartes demanded an investigation, and his faction supported impeachment Thursday.
Beyond the political fallout, Paraguayans described damage to confidence in banks and government. Asunción barista Elizabeth González recounted a customer insisting on cash because he distrusted banks. Exporter Eduardo López said the scandal would deepen concerns among his American business contacts. Student leader Lizza Lugo expressed hope that voters would remember the crisis when choosing a president in 2028.
