Ueno Bank scandal plunges Paraguay into political crisis

The collapse of Ueno Bank, a Paraguayan digital lender, on November 3 has pushed the South American country into a political crisis. The scandal involves suspected banking irregularities, hundreds of millions of dollars in public money and business ties between the bank's owner group and President Santiago Pena. Pena remains in office, but the Senate has opened impeachment proceedings against him.

What happened to the bank

Ueno Bank belongs to Grupo Vazquez, a large Paraguayan conglomerate. Launched in 2021, it grew quickly and recently had around three million customers, almost half of the country's population. There were warnings that it might have lent excessively to companies linked to its owners.

On November 3, the Paraguayan Central Bank (BCP) stepped in after finding that Ueno had breached minimum solvency requirements and no longer had enough capital to cover its risks. Operations were suspended, leaving millions of customers without access to their accounts. Police guarded branches against protesting customers.

Investigators are examining possible loans to other companies in the same group above legal limits, possible concealment of the capital shortfall, and why the central bank did not act sooner.

Public funds and the president

The bank held large deposits of public money, including from IPS, the social security agency responsible for pensions and welfare payments. Media reports put the total at 800 to 850 million US dollars.

Pena maintained business links with Grupo Vazquez until March 2025 but denies direct involvement in the bank. Scrutiny has also fallen on his 2023 appointment of Carlos Carvallo as central bank president; Carvallo had previously chaired Financiero Ueno, the finance company that became Ueno Bank. Carvallo resigned on November 3 at Pena's request.

Charges and next steps

On November 4, prosecutors charged 27 people, including eight bank executives. On November 5, a judge remanded several former executives in custody, among them Grupo Vazquez president Federico Miguel Vazquez Villasanti; two others were placed under house arrest.

Deposits up to the equivalent of 37,600 dollars per customer are protected by law, and a new law allows early payouts of about 20,000 dollars per saver. Pena offered his resignation on November 5, but Congress did not accept it. If he leaves office, Vice President Pedro Alliana would take over.