How Paraguay's Ueno Bank Scandal Took Down Country's Economist President

Paraguay's President Santiago Pena resigned on Thursday after the collapse of ueno, a prominent commercial bank with ties to his government.

Here are more details on ueno and how its collapse led to the president's downfall.

What Is Ueno?

Ueno, which spells its name with a lowercase "u", is a digital lender that grew rapidly from a niche local fintech company into a mid-sized Paraguayan bank. 

Launched in 2021, ueno had been compared to other fast-growing digital banks like Nubank, Monzo or Revolut.

As of June, the company said it had around 3 million customers -  in a country of 6.5 million people - and administered roughly $850 million in public funds, including money from state institutions and pension-related bodies.

The bank's rapid expansion made it one of Paraguay's most visible financial success stories. But in recent months it came under regulatory scrutiny over alleged excessive lending to companies linked to its controlling shareholder, Grupo Vazquez. 

Paraguay's central bank intervened after determining that ueno had breached minimum solvency requirements, triggering a crisis that left millions of customers temporarily unable to access their accounts. 

What Links President Pena To Ueno?

Pena, an economist who was elected in 2023, has faced political scrutiny because of his past business ties to Grupo Vazquez. Pena has said he was a Grupo Vazquez shareholder until March 2025 when he sold his stake.

Ueno says Pena never had a direct relationship with the bank as a shareholder or investor.

Opposition lawmakers have accused Pena of conflict of interest, misuse of pension funds and institutional cover-up. Pena, who has repeatedly rejected any suggestion of improper ties, has described the controversy as the political escalation of what began as a regulatory issue and has argued that it should be addressed through the courts.

Prosecutors said on Thursday he was among those being investigated over the bank's failure but he has not been taken in for questioning. They issued arrest warrants for eight ueno executives this week.  

How Did Regulators Deal With Ueno?

Questions have focused on whether regulators adequately supervised ueno as it expanded, particularly because the country's central bank chief, Carlos Carvallo, had previously been head of the digital lender.

Carvallo resigned from the central bank on Tuesday after it put ueno into resolution, its strongest measure short of immediate liquidation. 

The central bank has denied any conflict of interest, saying Carvallo recused himself from all decisions related to ueno. Nonetheless, pressure mounted after details of a regulatory probe became public, with lawmakers, banking industry representatives and opposition figures raising doubts as to whether there had been sufficient oversight.

What Has Happened To The Ueno Accounts?

The central bank said it was working to transfer ueno customer accounts to other financial institutions, a process that created strains across the banking system and contributed to outages at several banking apps.

Customers are still unable to access their accounts within ueno. Some gathered outside ueno branches this week seeking access to their savings.

Ueno's mobile-first model helped attract new customers who were underserved by traditional banks and gave many Paraguayans easier access to digital payments, savings and other financial services. 

Those who have been unable to access their accounts include pensioners who receive state benefits through ueno, prompting authorities to move quickly to guarantee deposits and safeguard public funds. Pena earlier this week approved legislation to help accelerate payments to depositors affected by the collapse of the bank.

Could This Affect Paraguay's Financial System More Widely?

Authorities say the crisis is limited to ueno and does not reflect broader weaknesses in Paraguay's banking system.

In addition to deposits, the bank said in a 2026 statement it had secured about $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 and Bank of America.

Paraguay has won investment-grade credit ratings and built a reputation as one of South America's more stable and reform-friendly economies. It is unclear if the crisis will affect the country's reputation in the longer term.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)