Paraguay’s President Santiago Pena is facing impeachment following the collapse of Ueno Bank, a major digital bank, which has plunged the South American country into its deepest political crisis in more than a decade. Pena announced his resignation on Thursday, but politicians formally filed impeachment charges against the president. Pena, a former International Monetary Fund (IMF) economist, then requested a 72-hour extension to present his defence at an impeachment hearing, because he had been given less than 12 hours to answer “an accusatory writ and about 300 pages of attachments”, adding: “That is not due process.” However, the Senate convened a rare session on Friday to consider Pena’s political future, opting to move forward with efforts to remove him from office.
Until March 2025, Pena held a stake in Grupo Vazquez, the parent company that owns Ueno Bank. Ueno Bank was established in 1976 and remained a small financial operation for decades. After being granted a full banking licence in 2023, it rebranded and grew to become a household name in Paraguay within five years.
Customers were incentivised with cashback offers on groceries and it built a network of more than 70 branches. The bank sponsored Paraguay’s national football team and its name was plastered across the country’s main stadium. Ueno bank reported that it had 3 million customers, roughly 60 percent of Paraguay’s adult population.
The digital bank managed $800m of public funds, including about $380m invested by Paraguay’s state pension and health fund, according to data from the Central Bank of Paraguay. On Monday, Paraguay’s central bank decided to put Ueno bank into resolution – the strongest action it can take short of placing the bank into liquidation – after finding that its solvency ratio, a measure of its capital against its risk-weighted assets, had dropped to less than half of the legal requirement. Resolution allows regulators to transfer a failing bank’s deposits to other institutions before liquidating remaining assets.
Customer accounts were frozen, leaving millions of depositors, retirees and workers scrambling to recoup their savings and unpaid wages. Ueno Bank’s nearly 3 million customers still cannot withdraw cash, make digital payments or use their bank cards. Regulators at Paraguay’s central bank found a pattern of risky lending to “insiders”, reported ABC Color, a leading Paraguayan newspaper.
This means that executives or major investors of a bank have approved questionable, low-security loans for themselves, their families or their own businesses. In this case, Ueno had loaned $146m to companies tied to its owner, Grupo Vasquez, which has links to Paraguay’s president. Investigators found loaned amounts went beyond legal limits and were not backed up by enough collateral to cover the debts if they went bad.
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