Ueno Bank Collapse Forces Paraguay President's Resignation and Impeachment

Paraguay’s President Santiago Peña was impeached and removed from office on Friday following the sudden collapse of Ueno Bank, a digital lender that served a large portion of the country’s adult population. The crisis began early Tuesday morning when the bank’s digital services stopped working, freezing assets for millions of users. By the end of the week, the financial shock had escalated into a political earthquake that toppled the head of state.

Ueno Bank reported having 2.9 million customers, a figure representing approximately 60% of Paraguay’s adult population. The Central Bank noted that the institution held deposits for around 1.8 million people. Authorities stated that by Saturday, nearly 1.2 million customers had received advance payments through the state’s deposit guarantee fund, though many others remained in limbo waiting for their money.

Protests gathered outside the Congress building in downtown Asunción starting Tuesday and continuing through Friday. Elizabeth González, a 28-year-old barista working near the legislative site, said trust in the financial system had evaporated. She noted that customers were insisting on paying in cash because they no longer trusted any bank. "If Paraguayans themselves aren't confident right now, foreign investors will be less so," González said.

The bank, which launched as a fintech startup in 2021 and began operating as a formal bank in November 2023, grew rapidly using digital marketing and cashback incentives. Batarram Caballero, a 23-year-old biochemistry student and president of the student center at the National University of Asunción, said the rise was too fast. She recalled intense marketing campaigns in the days before accounts were frozen. "They were bombarding us with messages telling us to put our money there," Caballero said. Classmates had frozen funds needed for bus fare and food, which she described as discouraging to witness.

Investigations revealed that Ueno held substantial public money. The Social Security Institute, known as IPS, had invested approximately $355 million in the bank, accounting for roughly 9% of its portfolio. Manuel Ferreira, an economist and former finance minister, questioned how such a young bank managed so many assets. He pointed out that many loans went to companies linked to the bank’s controlling owners, Grupo Vásquez. Specifically, $146 million in loans were made to just three related companies. Ferreira argued that the promissory notes on some transactions were signed by the same individuals on both sides.

President Peña faced personal scrutiny due to his ties to the bank’s holding company. In an asset declaration submitted after taking office in 2023, he listed shares in Ueno Holding valued at about $845,000. Those shares represented about 1.6% of the company’s paid-up capital. Peña sold the shares in March 2025. Prosecutors alleged he used his position to influence public agencies to keep deposits at the bank despite his connections. He also appointed Carlos Carvallo, the former head of Ueno Bank, to lead the Central Bank in 2023.

Peña resigned on Thursday and was impeached on Friday. The following day, prosecutors charged him with breach of trust and administration for personal gain. He was ordered to remain in pretrial detention at a military facility. Peña has pleaded not guilty. Pedro Alliana, the vice president, was sworn in as president to serve until August 2028.

Carvallo was arrested and charged with breach of trust, administration for personal gain, and producing false public documents. A judge ordered him held in pretrial detention at a police facility. Eight other Ueno executives, including CEO Miguel Vásquez, were also arrested and charged.

The crisis intensified a power struggle within the ruling Colorado Party. Horacio Cartes, a tobacco magnate and former president, had selected Peña for the 2023 election but their relationship had strained. After the collapse, Cartes publicly distanced himself from Peña on Wednesday, calling for an investigation. His faction backed the impeachment the next day. For protesters, the scandal represented a reckoning with the political establishment. Rodrigo Piatti, a 45-year-old activist, said the political line of succession needed to be challenged. "Everything that’s wrong with Paraguay… is Horacio Cartes and his line of succession," Piatti said.