ASUNCIÓN, Paraguay — When Ueno Bank's services abruptly stopped working in the early hours of Tuesday morning, the consequences were immediate for the millions of Paraguayans who had come to depend on it for everyday transactions.
"People don't have any trust," said Elizabeth González, a 28-year-old barista at a café in downtown Asunción, a few blocks from Paraguay's Congress building, where protesters had begun gathering after the bank's collapse was announced Tuesday.
Earlier, one customer had walked into the café and insisted on paying in cash. He no longer trusted any bank.
"If Paraguayans themselves aren't confident right now, foreign investors will be less so," González said.
The collapse affected far more than the bank's shareholders. Ueno said it had 2.9 million customers — around 60% of Paraguay's adult population. The Central Bank said the bank had approximately 1.8 million depositors.
By Saturday, authorities said almost 1.2 million customers had received an advance payment under the state's deposit guarantee fund, but many were still waiting.
It also led to the impeachment and removal of President Santiago Peña, a close ally of President Donald Trump, and exposed a power struggle inside within the ruling Colorado Party.
The anger was palpable outside Congress on Friday, where hundreds had gathered to protest not only their inability to access their money but also what they saw as a broader failure of accountability.
"I came not because it affects me personally, but because it affects all of Paraguay," said Elodia Saveredo, a 71-year-old housewife who sells her own handicrafts online.
Batarram Caballero, a 23-year-old fifth-year biochemistry student and president of the student center at the National University of Asunción, said classmates had money frozen that they needed to cover basic expenses.
"It wasn't a lot of money, perhaps, but it was money for their bus fare. It was money for their food," she said. "To hear that and not be able to do anything because I don't have the resources to help them is very discouraging."
Ueno Bank launched as a fintech in 2021 and began operating as a bank in November 2023. Its meteoric rise to become one of the country's most important financial institutions was driven by slick marketing and a digital model based around convenience and cashback deals; customers could open accounts on their phones and were offered incentives to process payments through the platform.
Caballero believes the crisis was foretold by an intense campaign in the days before accounts were frozen.
"They were bombarding us with messages telling us to put our money there," she said. "There were also rumors about what was already on the cards."
The bank also held substantial public funds. The Social Security Institute, known as IPS, had around $355 million invested in Ueno, roughly 9% of its portfolio.
The sums involved have raised questions about how such a young bank came to hold so much public money.
Manuel Ferreira, an economist and former finance minister, told local outlet ABC Color that the collapse raised fundamental questions about how the bank managed its assets. He pointed out that, in a typical bank, shareholders provide only a small portion of the money behind its assets, while the bulk comes from customer deposits.
He also argued that marketing and discounts helped attract customers but did not create lasting assets. A bank's principal asset, he said, was its loan portfolio: money owed by borrowers.
But in the case of Ueno, many of those loans had gone to companies directly linked to the bank's controlling owners, Grupo Vásquez, including $146 million in loans made to just three companies. He described Ueno's promissory notes as being signed by the same people on both sides of some transactions.
The scandal hit Peña particularly hard because of his personal links to the bank's holding company, in which he held shares even after taking up the presidency. He also appointed Carlos Carvallo, who had led Ueno Bank, to head Paraguay's Central Bank in 2023.
In his asset declaration submitted weeks after taking up the presidency in 2023, Peña listed shares in Ueno Holding, then valued at around $845,000. Those shares represented around 1.6% of the company's paid-up capital when he later sold them in March 2025.
Prosecutors allege that, while president, he used his position to influence public agencies and state-owned entities to maintain deposits with the bank despite his connections to its parent group.
Peña resigned Thursday and was impeached and removed from office Friday. The following day, prosecutors charged him with breach of trust and administration for personal gain. He was ordered held in pretrial detention at a military facility pending the investigation. Peña has pleaded not guilty. Pedro Alliana, the country's vice president, has been sworn in as president to serve out the rest of Peña's term until August 2028.
Carvallo was also 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 Ueno executives, including 36-year-old CEO Miguel Vásquez, were also arrested and charged.
The crisis has also put the spotlight on Horacio Cartes, a tobacco magnate and former president of Paraguay who wields considerable political and economic influence.
Cartes handpicked Peña, his former finance minister, to lead his Honor Colorado faction into the 2023 presidential election. But the relationship between the two men had become increasingly strained, apparently over Peña's efforts to establish his own power base within the party.
In September, senators aligned with Cartes sought information from the Central Bank about Ueno's transactions with related companies and its public-sector deposits.
After the bank collapsed, Cartes publicly distanced himself from Peña, releasing a public statement on Wednesday calling for an investigation and insisting there should be "no impunity for anyone." The following day, his faction backed Peña's impeachment.
The move was widely seen as a decisive withdrawal of political protection for Peña, and an opportunity for Cartes to reassert his influence.
But for those gathered outside Congress protesting, the scandal was about more than a bank collapse. It was a reckoning with Paraguay's political establishment.
For Rodrigo Piatti, a 45-year-old activist with the anti-corruption campaign group Comisión Escrache Ciudadano, the scandal would only lead to real change if the political establishment, including Cartes, were challenged.
"Everything that's wrong with Paraguay… is Horacio Cartes and his line of succession," Piatti said. "[Paraguay needs] the opposition to take power. A real opposition to take power, and for all these criminals to be put in prison. That's the dream of all Paraguayans."
The crisis has also raised questions about Paraguay's image among foreign businesspeople. Eduardo López, a 35-year-old exporter whose company operates in Paraguay and the United States, said the scandal would only worsen the lack of confidence he had already seen among American business contacts.
"We are a serious Paraguayan company, but [American businesspeople] don't trust the Paraguayan government," he said. "It's a disaster."
Nearby, Lizza Lugo, a 22-year-old student leader at the National University, expressed frustration with the status quo and said she hoped voters would bring change in the 2028 presidential election.
"The laws apply differently to those who have money and those who don't. That is the reality in Paraguay," she said. "I do hope people don't have short memories, because they forget these things very quickly."
