The Ueno Bank collapse is turning into one of the biggest financial and political scandals in the history of Paraguay. At issue are suspected banking irregularities, hundreds of millions of dollars in public funds, and business ties between the bank and the country's president, Santiago Pena.

The crisis was triggered on November 3, when the Paraguay's central bank initiated resolution procedures against Ueno after determining that it had breached minimum solvency requirements. The public prosecutor has since announced three investigations into suspected financial crimes; 27 individuals have already been formally charged.

Pressure on Pena intensified. On November 5, he tendered his resignation, but the Paraguayan Congress did not accept it. Instead, the Chamber of Deputies and the Senate voted unanimously to impeach him.

What is Ueno Bank, and what happened?

Ueno Bank is a digital bank belonging to the Grupo Vazquez, a big Paraguayan conglomerate.

Launched in 2021, it expanded remarkably fast: It recently had around 3 million customers, almost half the population of Paraguay. At the same time, there were warnings that the bank might have extended excessive loans to companies associated with its owners.

On November 3, the central bank intervened, having determined that Ueno had breached minimum solvency requirements: It no longer had sufficient capital to provide security for risks it had incurred. Business operations were abruptly suspended, leaving millions of customers unable to access their accounts.

What caused the crisis?

Investigations are primarily focused on three potential problems.

First, Ueno Bank is believed to have extended credit to other companies from the same group, and these may have exceeded legal limits.

Some business dealings may also have served to conceal the lack of capital, and make the bank's financial situation appear better than it actually was.

There is also the question of why the central bank didn't intervene sooner, despite indications that there were problems.

How much public money is managed by Ueno Bank?

Ueno Bank held huge deposits of public money. Its most important investors include the Instituto de Prevision Social, the Paraguayan social security agency responsible for pensions and social welfare payments. According to media reports, Ueno Bank administers public funds totaling as much as $800-850 million (€762 million).

Not only is the size of the amount problematic, so is the concentration of public funds in a single financial institution — one that has had to be placed under state control. Other state institutions are also said to have continued to deposit funds with the bank.

This raises questions about how state institutions make their investment decisions, and the risks to which they have exposed public funds.

What are the bank's connections to Santiago Pena?

There is Pena's business relationship with Grupo Vazquez, to which the Ueno Bank belongs. The Paraguayan president maintained business connections with the conglomerate until March 2025, long after his election as head of state. However, he denies having had any direct involvement with the bank.

On the other hand, Pena's appointment of Carlos Carvallo as president of the central bank in 2023 has come under scrutiny. The decision is controversial because until then Carvallo was the chair of the finance company that became Ueno Bank, Financiero Ueno. It raises questions about possible conflict of interest, and the independence of banking supervision.

Carvallo resigned on November 3, at Pena's request.

Who else is under suspicion?

On November 4, the public prosecutor's office formally charged 27 people: eight Ueno Bank executives, and 19 others with connections to companies associated with the bank.

The investigations are looking into suspected breach of trust, attempted fraud, breach of duty in crisis situations and violation of the legal obligation to keep records.

On November 5, a judge remanded several former bank executives in custody, including Federico Miguel Vazquez Villasanti, the president of Grupo Vazquez. Two other accused were placed under house arrest.

What will happen now?

The Central Bank has initiated winding-up proceedings against Ueno Bank. Deposits of sums up to the equivalent of $37,600 per customer are protected by law. A law has also been passed that will enable around $20,000 per saver to be paid out early.

However, it is still not clear when the affected customers will actually get their money back, or what will happen to deposits greater than the legally protected maximum.

The political situation is more complicated, with political immunity at stake. Had Pena left office in a regular way — by resigning — he would have automatically become a senator for life, giving him parliamentary immunity from prosecution. But his impeachment means he loses this status, and can be prosecuted.

Pedro Alliana, Pena's former vice president, was sworn in on Friday to serve out the remainder of Pena's term, which runs until August 2028.

Update, November 7, 2026: This article has been updated with new information on Pena's impeachment.

This article was originally written in German.