Paraguay's Central Bank Seizes Ueno Bank Amid Crisis

Paraguay’s central bank seized Ueno Bank, a major digital lender that had grown to serve over 60% of the country’s adults within five years. The swift collapse of the bank has sent shock waves through the nation’s financial system.

President Santiago Peña now faces impeachment after several members of his own conservative Colorado Party rebelled. Both main factions in the lower house pledged support for impeachment, with a debate scheduled for Thursday.

Peña, a former International Monetary Fund economist, had sought to move past the scandal in a video message, accepting no blame and promising to protect depositors’ savings. He also approved emergency payouts to depositors and named a new central bank chief.

The political upheaval and promises of relief have left a bigger question unanswered: how a bank linked to the president could grow so rapidly despite repeated warnings about its dubious lending practices. The bank’s rapid expansion has raised concerns about regulatory oversight and political influence.

Ueno, which won its banking license in 2023, had become a household name through generous cash-back offers, sponsorships, and a presence in over 70 locations. Government money poured into Ueno’s coffers under Peña, who also appointed a former Ueno executive to lead the central bank.

As of last month, Ueno reported holding roughly $800 million in public deposits, including funds from the state pension and health fund. However, central bank inspectors had found a pattern of risky lending to insiders, with nearly $39 million going to three companies tied to its owners in September 2025.

Peña repeatedly dismissed these warnings, defending Ueno and the central bank’s oversight as a smear campaign. But on Monday, regulators found poorly documented lending and wrongly counted expenses, leading to the bank’s seizure and the collapse of its capital cushion.

Ueno’s app, cards, and transfers went dark, leaving depositors unable to access their savings. Officials said they had begun repaying depositors, opening new accounts for about 280,000 who had banked only with Ueno.

Eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale, have been detained. Prosecutors also charged 27 bank officials and business associates with offenses including breach of trust and attempted fraud.

Hundreds of Ueno employees and others from Grupo Vázquez protested, demanding severance and unpaid wages. Meanwhile, retirees, depositors, and students flooded the streets of Asunción, demanding Peña’s impeachment and calling him the enemy of savers.

Riot police used pepper spray and rubber pellets to disperse crowds. Many demonstrators saw Ueno’s collapse as a case study in official corruption, with Paraguay ranking second worst in South America on the Transparency International corruption index.

At the national stadium that once bore Ueno’s name, the bank’s logo had already been scrubbed away. Across the capital, fresh graffiti denounced politicians as thieves.