A bank used by most of Paraguay's adults fails, and takes the president with it

Late on Monday 2nd November, the board of Paraguay's central bank voted unanimously to take control of Ueno bank, which it said no longer held even half the capital the law requires.¹ By the time customers woke on Tuesday, its app, cards and transfers had stopped working, and its branches were shut under police guard.²

Ueno had 2.94 million customers in June, by its own count about 63% of Paraguay's adults.³ Four days after the freeze, the president of the country was out of office and under arrest.

A bank on everyone's phone

Ueno began as a small finance company and became a full bank only in November 2023. It grew quickly by signing people up through a phone app, and by its own figures about three in every ten instant transfers in Paraguay went through it.³ Yet it held only about 9% of the deposits in the banking system:⁴ it was a bank that many people used for small, everyday sums.

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The central bank had first formally told Ueno to bring certain loans within legal limits on 5th June.⁵ It says the bank then lent beyond those limits to companies linked to its own owners, the Vázquez family's business group; once those loans were counted as risky, its capital fell below half the legal minimum.¹ The step the central bank took, called resolution, means a regulator takes over a failing bank, moves its deposits and good assets elsewhere and winds up the rest.⁶

Most savers will be paid. Paraguay's deposit guarantee fund covers up to 75 monthly minimum wages per person, 228.3m guaraníes, or about $36,000, and the central bank says that covers about 97% of Ueno's depositors in full.⁵ By Friday night about 1.2 million people had received a first payment of up to 10m guaraníes each, about $160m in all, according to the economy minister.⁷ The bigger losers may be public bodies. Ueno held about a quarter of its deposits for the state, including about $355m from the national social security fund, the IPS, which pays pensions and runs hospitals.⁸

Why it reached the president

Santiago Peña, Paraguay's president since August 2023 and a former central bank economist and finance minister, bought shares in 2019 in the company that later became Ueno Holding, the bank's parent.⁹ He declared them when he took office, and says he left the holding company in the spring of 2025, by not joining a reorganisation. He and Ueno say he never owned shares in the bank itself.¹

His opponents pointed to what happened while he was in office. Peña appointed Carlos Carvallo, a former head of Ueno's finance company, as president of the central bank, and 83 days later the central bank gave Ueno its banking licence.⁸ On Tuesday Carvallo said he had signed his resignation at Peña's request, but would stay to oversee the rescue.² Prosecutors ordered eight arrests that day, including the bank's president and chief executive.¹

Peña wrote on social media that "those responsible will have to answer to the courts, without exceptions or privileges".¹ On Wednesday marchers in Asunción carried a shorter message on their placards: "Cayó Ueno, ahora que caiga Santi" ("Ueno has fallen, now let Santi fall").¹⁰

Resignation refused

On Thursday afternoon Peña resigned in a recorded video. "I do so with the stability of our country, social peace and the need to preserve our democratic institutions in mind," he said,¹¹ and apologised "if at any moment I have failed".¹²

Congress did not accept it. Under Paraguay's constitution, a former president becomes a senator for life unless he has been impeached and found guilty.¹³ Minutes after the video, the Chamber of Deputies voted 78 to 0 to impeach him; every sworn deputy voted in favour.¹⁴ A joint session called to accept his resignation then collapsed when his supporters in the governing Colorado Party walked out.¹⁵ The party's leader, the former president Horacio Cartes, had already withdrawn his support: "We will not side with the theft of public, private and pension funds."¹¹

Peña's lawyers told the Senate on Friday that the charge sheet contained only circumstantial signs, that he had sold his shares before any of the people charged had acted, and that it was the Senate, not the president, that confirmed Carvallo.¹⁶ Peña did not attend. At about 7pm local time the Senate found him guilty by 44 votes to 0 and removed him.¹⁷ The only president removed this way before him, Fernando Lugo in 2012, lost by 39 to 4.¹⁸

Within the hour prosecutors moved to charge Peña and ordered him and Carvallo detained; Peña was held at home overnight.¹⁹ On Saturday the chief prosecutor for corruption, Nancy Salomón, said he faces two charges, breach of trust and administration for personal gain, which together carry up to 20 years in prison. Judge Humberto Otazú froze his assets and ordered him held at a military base while the investigation continues.²⁰ Peña denies wrongdoing and has not been convicted of any crime. In all, 27 people linked to the bank face charges.⁶

Where it stands

The vice-president, Pedro Alliana, was sworn in on Friday night²¹ and, under the constitution, serves out the term to August 2028 without a new election.¹³ "The Paraguay we receive today has urgent needs," he told Congress, promising that savers "will be fully compensated".²¹

The guarantee fund must finish paying covered savers by 17th November.² What happens to the deposits above the cap, including the pension fund's, depends on what Ueno's remaining assets fetch, and the central bank says it cannot promise full recovery. Peña's lawyers say they will ask the Supreme Court to annul his trial.¹⁶