Paraguay is facing a major banking and political crisis after its central bank intervened in Ueno Bank, a rapidly growing digital lender, leaving millions of customers unable to access their money temporarily. This has triggered protests and raised questions about the lender's financial and health and its links to Paraguay's political leadership.
The crisis began on Tuesday, November 3, when the Central Bank of Paraguay (BCP) placed Ueno Bank under official control after discovering that its solvency ratio fell below half the legally required minimum. The intervention has triggered widespread protests outside bank branches, raised concerns over public fundas and intensified political pressure on President Santiago Peña, whose past business ties to the company that controls the Ueno Bank.
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The BCP stated that its board unanimously approved the resolution process on November 2 after adjustments to Ueno Bank's financial statements during a regulatory regularisation process revealed a severe capital shortfall. According to the regulator, the process is aimed at protecting depositors, preserving the bank's assets and maintaining financial stability. The BCP's intervention process will reportedly involve appointing officials in order to examine the bank's financial position and oversee its assets.
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Central Bank President Carlos Carvallo resigned at the request of President Santiago Peña. Carvallo previously chaired the finance company that evolved into Ueno Bank, drawing heavy criticism over regulatory blind spots and conflicts of interest.
The Specialised Unit for Economic Crimes and Anti-Corruption ordered the detention of eight high-level executives and figures tied to the bank, including founder and majority shareholder Miguel Vázquez and Ueno Bank President Juan Manuel Gustale, Visegrád 24 reported.
The bank reportedly serves around three million people, which is roughly 60% of Paraguay's adult population. The intervention by BCP completely froze Ueno Bank's digital app, credit cards, and transfer capabilities.
While the Central Bank's stated that the reason for intervention was Ueno's severe capital shortfall, the crisis also raised questions about the bank's rapid expansion, lending practices , relationship with politically connected businesses and its involvement in managing public funds. According to the Associated Press, Ueno managed approximately $800 million to $850 million in public money, including roughly $350 million invested by Paraguay's state pension and healthcare institution, the institute Previsión Social (IPS).
The IPS has stated that its investments in Ueno included financial instruments such as bonds and deposits, raising concerns over the recovery of public money. The crisis also affected approximately 32,000 pensioners who receive their monthly benefits through Ueno, although IPS officials said that pension payments would not be affected and will continue without disruption. IPS finance manager Gladys Vera said that the pension payments were held at another bank and that the institution would seek to recover its investments.
The banking crisis has intensified scrutiny of President Santiago Peña's links to Grupo Vázquez, the conglomerate that controls Ueno Bank. Reuters reported that Peña was a business partner of the group until March 2025, while the bank has said the president was never a shareholder or investor in Ueno itself.
The appointment of Carlos Carvallo, who previously headed Ueno's predecessor institution, to lead the central bank in 2023 had also drawn criticism over potential conflicts of interest. Carvallo submitted his resignation on November 3 at Peña's request, as the government faced mounting criticism over the handling of the lender.
Paraguay's prosecutor's office requested a criminal investigation into the events surrounding Ueno and ordered the arrest of eight people linked to the bank, Reuters reported.
The political fallout further deepened on November 4, when 35 lawmakers in Paraguay's 80-member lower house submitted impeachment articles against Peña and requested an extraordinary congressional session. The opposition accused the president of conflicts of interest, misuse of pension funds and cover-ups related to the bank's collapse.
Peña said depositors' interests should come first and that those responsible for irregularities would face justice, Reuters reported. However, the opposition does not currently have the two-thirds majority required to advance impeachment, although some lawmakers from Peña's ruling Colorado Party have supported the effort.
The crisis has raised broader questions about financial oversight, related-party lending and the protection of public money in Paraguay.
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