Paraguayan President Santiago Pena resigned on Thursday after a banking crisis reportedly left nearly half the country’s population unable to access their money. However, Congress put his resignation on hold as impeachment proceedings moved forward, meaning he will remain in office temporarily.
The developments are a major reversal for the former International Monetary Fund ( IMF ) economist, who had enjoyed the support of some of the country’s most influential politicians and was welcomed in Washington just weeks ago as a key ally of the Donald Trump administration . It is a digital bank that expanded from a small fintech business into a medium-sized lender in Paraguay . It also became a sponsor of Paraguay’s national football team and had its name displayed across the country’s main stadium. Its rapid growth made ueno one of Paraguay’s most prominent financial success stories. However, the bank came under regulatory scrutiny in recent months over allegations that it had extended excessive loans to companies associated with its controlling shareholder, Grupo Vazquez. Paraguay’s central bank stepped in after finding that ueno had failed to meet minimum solvency requirements, the financial reserves banks are required to hold to ensure they can meet their obligations, including returning customers’ deposits. The authorities began arranging to transfer recoverable deposits and assets to other banks before selling off the remaining assets. Arrest warrants were also issued for eight senior executives of Ueno. The bank’s president, Miguel Vazquez, surrendered to the police. The bank’s app, cards and transfer services stopped working, while its branches shut their doors. This left anxious customers queuing outside in search of access to their money. Authorities have urged people to remain calm. They were demanding severance payments and unpaid wages. The president’s resignation did little to ease their anger. Pena has faced questions over his previous business connections with Grupo Vazquez. Ueno has maintained that Pena never had any direct association with the bank as a shareholder or investor. The affected customers include pensioners who receive government benefits through ueno. This has added urgency to the government’s efforts to protect deposits and ensure public money is safe. The bank’s collapse comes as a major setback for Paraguay, which has spent years trying to present itself as a politically and economically stable destination for foreign investors. This is despite the country remaining one of the poorest in South America. The crisis has also brought internal differences within the Colorado Party to the fore. The party has held a dominant position in Paraguayan politics for most of the past seven decades. The focus is now turning to who could succeed Pena. However, their relationship has since deteriorated as Pena worked to establish his own influence within the Colorado Party, which Cartes continues to lead. Cartes denied the allegations.
After receiving its banking licence in 2023, ueno quickly became a familiar name across Paraguay. The bank attracted customers with attractive cash-back offers on grocery purchases and expanded to more than 70 locations. As of June this year, the company said it had around 3 million (30 lakh) customers in a country with a population of 6.5 million (65 lakh). It also managed approximately $850 million in public funds, including money belonging to state institutions and pension-related bodies. Payments began on Thursday, starting with smaller accounts holding up to around $1,600. He has said he held shares in the group until March 2025, when he sold his stake. Cartes had played a key role in his political rise when he appointed him finance minister, and his political movement later helped him become president in 2023. In October 2025, Trump lifted financial sanctions against Cartes that had been imposed by the previous Joe Biden administration two years earlier over alleged corruption. With inputs from agencies Earlier reporting noted: How Paraguay’s Ueno Bank Scandal Took Down Country’s Economist President How Paraguay’s Ueno Bank Scandal Took Down Country’s Economist President How Paraguay’s Ueno Bank Scandal Took Down Country’s Economist President Earlier reporting noted: As of June, the ueno bank said it had around 3 million customers – in a country of 6.5 million people – and administered roughly $850 million in public funds. As of June, the ueno bank said it had around 3 million customers – in a country of 6.5 million people – and administered roughly $850 million in public funds.
Because the vice president himself is also being questioned by some sectors of society, it could have a systemic impact on the economy that affects everyone, not just depositors at one institution, luis Breuer, a former official with the central bank and International Monetary Fund, told news agency Bloomberg, “If Paraguay enters a period of political instability,.
The crisis at ueno, a prominent commercial bank which officially spells its name with a lowercase “u”, has caused a rift within Pena’s long-ruling Colorado Party, turning members against the 47-year-old leader. Pena publicly welcomed the decision, although he said his government had not lobbied Washington to have the sanctions removed.
Meanwhile, Central Bank president Carlos Carvallo, who had earlier served as Ueno’s chairman, stepped down at Pena’s request. On Tuesday, the Central Bank seized control of Ueno, calling the move necessary to “protect depositors and preserve the stability of the financial system. On Wednesday, a rush to open accounts with other banks caused their mobile applications to crash, adding to public concern. Under a law passed by Congress on Wednesday, a state guarantee fund must compensate affected depositors within five working days. Meanwhile, young employees, still wearing their ueno uniforms, burnt their credit cards and shouted slogans against Pena outside the labour ministry on Thursday. Pena’s position within the party weakened further on Thursday after its senior leader and former president Horacio Cartes called for his impeachment. Earlier reporting noted: Paraguay’s President Santiago Pena resigned on Thursday after the collapse of ueno, a prominent commercial bank with ties to his government.
Opposition lawmakers have accused him of a conflict of interest, the misuse of pension funds, and the cover-up of institutional wrongdoing. Pena has repeatedly denied having any improper links to the bank. However, he has not yet been called in for questioning. The transfer process put pressure on the entire banking sector and led to technical problems with several banks’ apps. The bank’s digital-first approach had helped it reach people who had limited access to traditional banking services. It also made digital payments, savings and other financial services more accessible to many Paraguayans.
The central bank said it was making arrangements to move ueno customers’ accounts to other financial institutions. On Thursday, prosecutors said Pena was among those under investigation in connection with the bank’s collapse.
