Ueno Bank scandal threatens Paraguay’s reputation and Peña’s presidency

Paraguay is facing a major financial and political crisis after the Central Bank took control of Ueno Bank, a fast-growing digital lender with close ties to President Santiago Peña.

The move, approved on Monday and publicly announced on Tuesday after news of the intervention had emerged, froze the funds of nearly three million customers and raised questions about the government’s oversight of the financial system.

The Central Bank suspended all of Ueno Bank’s operations, setting in motion a process that could lead to its liquidation, after finding that its solvency ratio had fallen below 50% of the legal minimum, following adjustments to its financial statements during a regularization process.

The measure effectively shut down the institution. Its branches, app, physical cards, and banking services were suspended while Central Bank-appointed administrators began examining its assets and liabilities.

Ueno, which has 2.9 million customers in a country of 6.1 million people, had become one of Paraguay’s most prominent financial institutions. Its sudden closure has disrupted everyday transactions, with businesses warning of a serious impact on commercial activity.

The Central Bank has said that deposits are protected by their Deposit Guarantee Fund — a deposit insurance scheme established in 2003 and administered separately — up to 75 minimum monthly salaries, equivalent to approximately US$38,000 per depositor. 

Around 97% of customers are estimated to have their deposits fully covered.

However, the consequences extend well beyond private depositors. 

Around 32,000 pensioners receive their benefits through Ueno, while the state-run Instituto de Previsión Social (IPS), which manages social security contributions and retirement payments, has approximately US$355 million invested in the bank.

Other public institutions also have funds exposed. The state electricity company, ANDE, has deposits and loans worth tens of millions of dollars in the institution.

In total, Ueno manages approximately US$850 million in public funds.

Peña under pressure Eight senior executives have been arrested, including the bank’s CEO and founder, Miguel Vázquez, and prosecutors opened an investigation into alleged financial misconduct.

The scandal has also directly affected the Paraguayan government. 

President Peña was a shareholder in Ueno Holding until 2025 and appointed Carlos Carvallo, a former Ueno executive, to central bank head after becoming president.

After the scandal broke on Tuesday, Peña announced on X that he had “requested the resignation of the president of the Central Bank.” 

He added that he had “reached an agreement with the presidents of both chambers of Congress to advance a bill that authorizes the use of the Guarantee Fund to begin immediate payouts to depositors.”

“This legislation will also ensure the recovery of public funds, as well as those belonging to the Social Security Institute (IPS) and other public pension funds,” the president wrote.

“This is an isolated case involving a single entity — not the national financial system as a whole — and those responsible will be held accountable before the justice system, without exception or privilege,” he assured.

Ante los hechos de público conocimiento registrados en el transcurso del día, he pedido la renuncia del presidente del Banco Central del Paraguay.

Además, acordamos con los presidentes de ambas cámaras del congreso el tratamiento de un proyecto de ley que autoriza el uso del…

— Santiago Peña (@SantiPenap) November 3, 2026 Notwithstanding, on November 4, opposition lawmakers and dissident members of the ruling Colorado Party began collecting signatures for an impeachment motion against Peña and Vice President Pedro Alliana over alleged conflicts of interest and the handling of public funds.

The initiative has yet to secure the congressional support needed to advance.

A test for Paraguay’s investment appeal The crisis threatens Paraguay’s reputation as an emerging investment destination in South America, particularly for Brazilian capital.

The country has attracted investors seeking a stable economic environment and business opportunities. 

Ueno itself had become a significant player in the financial system, managing substantial public resources and issuing US$350 million in international bonds earlier this year.

This crisis now threatens to undermine the confidence that has helped attract foreign investment.

For Peña, the scandal could become a defining test of his presidency, which began in August 2023.