Paraguay's President Santiago Peña resigned on Thursday after the collapse of ueno, a prominent commercial bank with ties to his government. The failure of the fast-growing digital lender set off a political crisis that ultimately ended the president's tenure, putting frozen accounts, disrupted pension payments and a central bank intervention at the center of national politics.

What Is ueno?

Ueno — which styles its name with a lowercase “u” — is a digital lender that grew rapidly from a niche local fintech startup into a mid-sized Paraguayan bank. Launched in 2021, the company drew comparisons with other fast-growing digital banks such as Nubank, Monzo and Revolut.

As of June, ueno 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. That customer base equated to nearly half the country's population, and the scale of the bank's public-money exposure would become central to the political scrutiny that followed.

The bank's rapid expansion made it one of Paraguay's most visible financial success stories. In recent months, however, it came under regulatory scrutiny over alleged excessive lending to companies linked to its controlling shareholder, Grupo Vázquez. 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 Peña to ueno?

Peña, an economist who was elected in 2023, has faced political scrutiny over his past business ties to Grupo Vázquez. He has said he was a shareholder in the group until March 2025, when he sold his stake. Ueno has said the president never had a direct relationship with the bank as a shareholder or investor.

Opposition lawmakers have accused Peña of conflict of interest, misuse of pension funds and institutional cover-up. The president, 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 argued that it should be addressed through the courts.

Prosecutors said on Thursday that Peña was among those being investigated over the bank's failure, though he has not been taken in for questioning. Arrest warrants were issued for eight ueno executives this week.

How Did Regulators Deal With ueno?

Questions have focused on whether regulators adequately supervised the bank as it expanded — particularly because the country's central bank chief, Carlos Carvallo, had previously headed the digital lender. Carvallo resigned from the central bank on Tuesday, after the institution placed 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. Pressure nonetheless mounted after details of a regulatory probe became public, with lawmakers, banking industry representatives and opposition figures raising doubts about whether oversight had been sufficient.

What Has Happened to ueno Accounts?

The central bank said it is working to transfer ueno customer accounts to other financial institutions, a process that has created strains across the banking system and contributed to outages at several banking apps. Customers remain unable to access their accounts within ueno, and some gathered outside its branches this week seeking access to their savings.

Ueno's mobile-first model helped attract customers who were underserved by traditional banks and gave many Paraguayans easier access to digital payments, savings and other financial services. Among those unable to reach their accounts are pensioners who receive state benefits through the bank, prompting authorities to move quickly to guarantee deposits and safeguard public funds. Peña earlier this week approved legislation intended to help accelerate payments to depositors affected by the collapse.

Could the Crisis 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 that it had secured about $510 million in financing from development institutions, international funds and capital markets, including 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 remains unclear whether the crisis will affect the country's standing in the longer term. In the nearer term, developments to watch include the transfer of ueno accounts to other institutions, the pace of payments to depositors under the legislation Peña approved this week, the progress of the investigation that includes Peña, and the cases against the eight ueno executives subject to arrest warrants.

— Reuters