Paraguay's Ueno Bank Collapse Sparks Political Crisis, Leading to President Peña's Resignation

Paraguay's central bank seized Ueno Bank on November 3, 2026, after its solvency ratio fell below half the legal minimum due to irregular related-party lending and accounting adjustments, locking out approximately 3 million customers—roughly 60% of the adult population—and placing hundreds of millions in public funds at risk, including about $380 million from the state pension and health fund (IPS). The intervention followed months of regulatory warnings about excessive loans to companies tied to the bank's owners, Grupo Vázquez, and a simulated loan sale allegedly used to mask exposures. Prosecutors ordered the arrest of eight executives, including bank President Juan Manuel Gustale and chief executive Federico Miguel Vázquez Villasanti, with charges later filed against 27 individuals for offenses including breach of trust.

The crisis quickly turned political. President Santiago Peña, who held shares in Ueno's holding company until March 2025 and appointed former Ueno executive Carlos Carvallo as central bank president in 2023, faced accusations of conflicts of interest. Carvallo resigned at Peña's request. Massive street protests erupted in Asunción and elsewhere, prompting Congress to discuss impeachment. On November 5, Peña announced his resignation in a video message, citing the need to preserve stability, as his own Colorado Party withdrew support.

Multiple international outlets, including AP News, BBC Mundo, Euronews, LA Times, and UPI, corroborate the timeline, the scale of customer impact, public fund exposure, arrests, and the president's resignation amid the turmoil. The central bank is transferring viable deposits to other institutions and advancing payouts under the deposit guarantee scheme (up to ~$38,000 per depositor), while emphasizing no systemic risk to Paraguay's broader financial system.