Paraguayan President Santiago Peña resigned on Thursday, November 5, 2026, following a political crisis triggered by the collapse of Ueno Bank, a digital lender with deep ties to his administration. The country’s lower house of Congress voted unanimously to pursue impeachment proceedings minutes after his resignation.
Ueno Bank Faces Insolvency After Rapid Growth
Ueno Bank, which secured a full banking license in 2023, grew rapidly to serve approximately 2.9 million customers—nearly 60% of the adult population of Paraguay, according to The Economist. The institution managed roughly $850 million in public funds. The bank had become a household name, sponsoring the national football squad, music festivals, and sports stadiums.
On November 3, 2026, the Central Bank of Paraguay placed the lender into a resolution procedure after determining its solvency ratio had fallen below 50% of the required minimum. Regulators discovered poorly documented lending to companies linked to the bank’s owners, as well as expenses that had been wrongly counted as assets. Once the books were corrected, the bank’s capital cushion fell to less than half the legal minimum.
Lawmakers Initiate Impeachment Proceedings Against Peña
Peña, who held a stake in Ueno’s holding company until 2025, faced growing accusations of conflicts of interest and negligence. Lawmakers from both the opposition and dissident members of his own Colorado Party initiated an impeachment motion, citing the president’s role in appointing Carlos Carvallo—a former Ueno executive—to lead the Central Bank. Critics had long denounced the appointment as a conflict of interest, though the bank maintained that Carvallo had recused himself from decisions involving Ueno.
Prior to the collapse, Peña had defended the bank and the central bank’s oversight, dismissing public concerns as a smear campaign designed to spook the public. However, as the crisis deepened, the political environment shifted. Vice President Pedro Alliana, who had been seeking the party’s nomination for the 2028 election, put his campaign on hold, stating, If we don’t get our house in order, there’s no presidential project.
In a video message recorded on Thursday, Peña announced his departure, stating, I do so with the stability of our country, social peace and the need to preserve our democratic institutions in mind.
He further added, I want to apologise to the people if at any point I failed.
Impact on Depositors and Financial Oversight
The Central Bank of Paraguay has initiated preparations for deposit-guarantee payments. Under the Deposit Guarantee Fund (Fondo de Garantía de Depósitos, FGD), eligible deposits are protected up to 75 monthly minimum wages. This currently represents a maximum guarantee of approximately US$38,270 per depositor. Estimates suggest that around 97% of Ueno’s depositors have balances fully covered by this guarantee. Liana Caballero, a director at the Central Bank, stated that authorities are working to expedite the process, which is set to reach an initial deadline on November 17, 2026, though an extension may be granted.
The consequences of the collapse extend to the state-run Instituto de Previsión Social (IPS), which manages social security and pension payments and had approximately US$355 million invested in the bank. Additionally, 32,000 retirees who collect their pensions through Ueno must now be transitioned to other financial institutions.
The crisis has also drawn scrutiny to the broader financial market. Following the resolution, USDT offers in Paraguay carried a reported 13% premium, which traders noted as a sharp illustration of the difficulty in obtaining dollars during banking disruptions.
Prosecutors have launched an investigation into alleged financial misconduct, resulting in the arrest of eight senior executives, including CEO Miguel Vázquez. While the Central Bank of Paraguay maintains that the Ueno situation is an isolated case, the event has prompted widespread public outcry, with demonstrators gathering outside bank branches and the Congress to denounce the loss of savings.
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