Paraguayan President Santiago Peña resigned. (AP file photo)
Paraguayan President Santiago Peña resigned today after the collapse of Ueno Bank, a digital bank close to his government that left nearly half the South American country's population without access to their savings.
According to reports from Agence France-Presse and Reuters, people across Paraguay protested angrily. Members of Congress voted unanimously today to initiate impeachment proceedings against Penia. But the leader, a U.S. ally, beat him to it, announcing his resignation minutes before the vote.
Here’s a closer look at Ueno Bank’s background and how its collapse led to the president’s ouster.
●What is the origin of Ueno Bank?
The English name of the bank presented on the official website actually starts with a lowercase letter u. This digital bank was established in 2021 and has rapidly grown from a smaller local financial technology company to a medium-sized bank in Paraguay. It has been compared with other fast-growing digital banks such as Nubank, Monzo or Revolut.
The company said it had about 3 million customers as of June and managed about $850 million in public funds, including funds from state agencies and pension-related entities. Paraguay has a population of approximately 6.5 million people.
The bank has expanded rapidly and become one of Paraguay's most high-profile financial success stories, but it has come under scrutiny from regulators in recent months for allegedly excessive lending to companies related to controlling shareholder Grupo Vázquez.
Paraguay's central bank stepped in after determining that Ueno had violated minimum solvency rules, triggering a crisis that left millions of customers temporarily unable to use their accounts.
●What is the connection between Panya and Ueno?
Pena, an economist by training, was elected president in 2023 and faced political scrutiny over his past business ties with the Vazquez Group. Pania once said that he was a shareholder of Vazquez Group and did not sell his holdings until March 2025.
Ueno said Peña never had a direct relationship with the bank as a shareholder or investor.
Opposition lawmakers accused Pena of conflicts of interest, misuse of pension funds and systemic cover-ups. Pena has repeatedly denied any inappropriate relationship and described the dispute as originally a regulatory issue but later elevated to a political matter, advocating that it should be handled through judicial channels.
Prosecutors said today that Peña was a subject of an investigation into the bank's collapse but had not yet been brought in for questioning. This week they issued arrest warrants against eight of Ueno's top executives. Ueno founder Miguel Vazquez surrendered to police.
●How do regulatory authorities deal with the Ueno issue?
The focus of doubts is whether regulatory authorities have fulfilled their supervisory responsibilities during Ueno's expansion, especially since Carlos Carvallo, president of the Central Bank of Paraguay, served as the head of the digital bank in the past.
The central bank took takeover measures against Ueno on the 3rd of this month, which was the most powerful disposal method except immediate liquidation. Cavallo subsequently resigned.
The central bank denied any conflict of interest and said Cavallo had recused himself from all decisions related to Ueno. Still, pressure has mounted on authorities as details of regulatory investigations have become public, raising questions from lawmakers, banking industry representatives and opposition figures about the adequacy of regulations.
●What is the current status of Ueno's account?
The central bank said it was moving Ueno customer accounts to other financial institutions. The operation put the entire banking system under pressure and led to the outage of application services at many banks.
Customers currently still cannot use Ueno accounts. Some people gathered outside the Ueno branch this week demanding to withdraw their deposits.
Ueno's mobile-first business model attracts new customer groups not adequately covered by traditional banking services, making digital payments, savings and other financial services more accessible to many Paraguayans.
People who lost access to their accounts included retirees who received government benefits through Ueno, prompting authorities to take swift action to safeguard deposits and safeguard public funds. Peña approved legislation earlier this week to help speed up payments to depositors affected by bank failures.
●Is this crisis likely to have a wider impact on Paraguay's financial system?
Authorities say the crisis is limited to Ueno and does not represent broader weaknesses in Paraguay's banking system.
In a statement this year, Ueno said that in addition to its deposit business, it has obtained approximately US$510 million in financing from development institutions, international funds and capital markets. These include a $350 million bond issuance on Wall Street led by JPMorgan Chase and Bank of America (BofA).
Paraguay has achieved an investment-grade credit rating and established an image as a relatively stable, reform-friendly economy in South America. It's unclear whether the crisis will have long-term consequences for Paraguay's reputation.
●Panya’s resignation and subsequent developments
Both houses of Congress must decide whether to accept Pena's resignation.
If not, a Senate trial will be held to determine his responsibility in the national scandal.
If the presidential position is confirmed to be vacant, Vice President Pedro Alliana will take over and complete his term until 2028.
