Ueno Bank Collapse Topples a President: Inside Paraguay’s Gripping Financial Storm

A fast-growing digital lender with millions of users has collapsed, and the fallout has pushed Paraguay’s president out of office.

Ueno bank was once Paraguay’s shiny fintech success story, and CIO Bulletin has been tracking how it fell apart. This week, the digital lender collapsed, and the shock was big enough to push President Santiago Peña out of office.

From Fintech Star to Frozen Accounts

Launched in 2021, ueno grew from a niche local fintech firm into a mid-sized bank, and people compared it to digital banks like Nubank, Monzo and Revolut. By June, it had about 3 million customers in a country of 6.5 million people. It also managed roughly $850 million in public money.

Then came trouble. Regulators questioned whether the bank had lent too much to companies linked to its main owner, Grupo Vázquez. Paraguay’s central bank then stepped in after finding that ueno had broken minimum solvency rules, which left millions of customers unable to reach their money.

Why a Bank Failure Became a Political Storm

So how did a bank problem reach the presidential palace? Peña, elected in 2023, has past business ties to Grupo Vázquez. He says he held shares in the group until March 2025, when he sold them. Ueno says he never had a direct relationship with the bank.

• Opposition lawmakers accuse Peña of conflict of interest and misuse of pension funds.

• Peña denies wrongdoing and calls it a regulatory matter for the courts.

• Prosecutors issued arrest warrants for eight ueno executives.

• Central bank chief Carlos Carvallo, a former ueno head, resigned on Tuesday.

Under pressure, Peña quit on Thursday in a recorded message. “No person is above Paraguay,” he said. Prosecutors say he is among those under investigation over the bank’s failure, though he has not been called in for questioning.

Authorities insist the damage is limited to ueno and do not point to wider weaknesses in the banking system. Paraguay holds investment-grade credit ratings, and the bank had raised about $510 million from development lenders, funds and capital markets. Will investors still trust the country’s stable reputation? CIO Bulletin will keep following the ueno bank story as pensioners and savers wait for their money.

News Source: Reuters, https://www.reuters.com/