Major Digital Bank In Paraguay Collapses With Half of Population's Savings

Paraguayan President Santiago Pena stepped down on Thursday amidst widespread protests and impeachment threats following the collapse of Ueno Bank, a prominent digital lender with ties to his administration and over half of the nation's adult population as customers. Authorities took control of the troubled bank after discovering risky insider lending practices and accounting irregularities, causing its capital to fall below the minimum legal requirements. This left millions of customers unable to access their savings.

The Associated Press reported that shortly after obtaining its banking license in 2023, Ueno rapidly expanded and became deeply entrenched in Paraguayan society. The digital lender, originally a finance company, offered attractive cash-back rewards on grocery purchases, expanded to over 70 physical locations, sponsored the national soccer team, and branded the country's main stadium.

Government funds heavily supported Ueno's operations during President Pena's tenure, with significant contributions coming from sources like the state pension and health fund, as well as revenue from Paraguay's hydroelectric dams.

As Ueno accumulated public deposits, concerns grew within the central bank. In June 2025, inspectors discovered a pattern of risky lending to affiliated companies, with Ueno extending substantial sums beyond legal limits and without adequate collateral to cover potential losses. On a single day in September 2025, nearly $39 million was given to three such companies.

Despite repeated warnings, President Pena dismissed the concerns and even defended Ueno and the central bank's oversight, labeling them as a smear campaign aimed at causing public panic.

Regulators finally seized Ueno Bank on Monday following a thorough investigation into the lender's loans and financial mismanagement. The central bank announced plans to transfer customers' accounts and remaining assets to other banks for liquidation. Ueno's mobile app, cards, and transfer services were immediately disabled, and physical branches were locked, leaving thousands of depositors stranded and unable to access their funds.

On Wednesday, panic spread as depositors rushed to open new accounts at competing banks, causing mobile banking apps of other institutions to crash.

Interim Central Bank President Pedro Acosta Bernal stated that the banking system remained stable and criticized President Pena for his handling of the situation. Eight senior Ueno executives, including founder Miguel Vazquez and former President Juan Manuel Gustale, were detained, along with 27 additional bank officials and business associates. These individuals face charges such as breach of trust and attempted fraud.