Face palm: Paraguay’s central bank has seized Ueno Bank after auditors examining the digital lender’s loans to companies affiliated with its owners found that loans and expenses were poorly documented and the bank had incorrectly counted them as assets. After those errors were fixed, Ueno’s capital fell to less than half the legal minimum and the bank’s app, cards and transfers went dark as branches closed their doors. About three million customers in a country of 6.5 million people were cut off from the savings, payments and benefits they processed through the bank.
The warning signs went back months. ABC Color, a leading Paraguayan newspaper, reported in June that central bank inspectors had identified a pattern of risky insider lending. Ueno had lent large sums of money to owner-managed companies beyond legal limits and without sufficient collateral to cover debts in the event of default.
Prosecutors have charged 27 bank officials and employees with breach of trust and attempted fraud. They claim that some of the funds lent to affiliated companies were diverted to other companies in the group. On Thursday, a judge ordered six executives detained pending trial, including founder Miguel Vázquez and bank president Juan Manuel Gustale, and placed two others under house arrest. All eight turned themselves in after arrest warrants were issued.
Gustale’s lawyer, José Fernández Zacur, argued that senior executives relied on employees to make loan decisions. “The president or board is not responsible for deciding who gets a particular loan,” he told local media.
Ueno grew quickly. It was a rebranded version of a decades-old financial company and received its banking license in 2023. In less than five years, it went from an obscure lender to a household name that counted more than 60% of Paraguay’s adults as customers. Generous cashback offers on purchased groceries. The bank also opened more than 70 locations, sponsored the national soccer team and had the country’s main stadium named after it. This logo has since been removed.
The bank also had a large share of public funds. Last month, Ueno reported about $800 million in public deposits, about a quarter of its total. This included money from the state pension and health fund and from the operators of Paraguay’s hydroelectric power plants.
These deposits are at the heart of the political struggle. Peña appointed Carlos Carvallo, the former president of Ueno’s predecessor Financiera Ueno, to head the central bank that oversaw the lender. Earlier this week, the central bank chief resigned at Peña’s request. Peña also had ties to Grupo Vázquez, which owned Ueno until March 2025. He says he sold his stake in the group this month and has not played an inappropriate role in the bank’s affairs. Just last month, he described concerns about Ueno as a smear campaign.
— Santiago Peña (@SantiPenap) November 5, 2026
Opposition MPs accuse Peña of conflicts of interest, misusing pension funds and helping to protect the bank from scrutiny. He denies wrongdoing and says the matter is a regulatory issue for the courts. His own Colorado Party has nevertheless turned against him. Party leader and former president Horacio Cartes supported the impeachment and said the party would not side with “the looting of public and private funds, as well as pensioners’ funds.”
In a video posted on He also apologized. “I would like to apologize to people if I have let them down at any point,” he said. “It was never my intention to abuse the trust placed in me.”
Peña said he would still appear before the Senate to “exercise my right to defend myself.” Congressional leaders were expected to accept his resignation, which would allow Vice President Pedro Alliana to take office without a Senate trial. Opposition senators are still pushing for it. They argue that resigning would give Peña the right to serve as senator for life, with legal protections that could prevent his prosecution. Alliana has distanced himself from Peña and put his own presidential ambitions on hold until the crisis is resolved.
The crisis also hit the economy. According to central bank exchange rate data, the Guaraní fell nearly 4% against the dollar on Thursday, extending its weekly loss to nearly 7%. The Labor Department estimates that about 7,000 direct and indirect jobs at the bank and related companies will be affected. In front of the Ministry of Labor, young employees still wearing Ueno uniforms burned their credit cards and demanded severance pay and back wages.
Peña pushed for a quick solution for customers still locked out. “Clarifying the facts and processing payments are obligations that must move forward simultaneously,” he said.
