Paraguayan President Santiago Pena resigned Thursday amid mass protests and impeachment threats following the collapse of Ueno Bank, a major digital lender with close ties to his administration and more than 60% of the country's adults as customers. Regulators seized the bank after uncovering risky insider lending and accounting irregularities that left its capital below legal requirements, locking millions of customers out of their savings. The Associated Press reports: Soon after winning its banking license in 2023, Ueno seemed to be everywhere in Paraguay. The digital lender, a rebranded version of a decades-old finance company, lured customers with generous cash-back offers on groceries, grew to more than 70 locations, sponsored Paraguay's national soccer team and plastered its name on the country's main stadium. Government money poured into Ueno's coffers under Pena. He also appointed Carlos Carvallo, president of Financiera Ueno, the predecessor to Ueno Bank, to run the central bank, the agency charged with supervising the digital lender. As of last month, Ueno reported holding roughly $800 million in public deposits, about a quarter of its total, including money from the state pension and health fund and the operators of Paraguay's giant hydroelectric dams.
Even as retirees' savings and other public money piled up at Ueno, worries were escalating inside the central bank. In June, its inspectors found a pattern of risky lending to insiders, reported ABC Color, a leading Paraguayan newspaper. Ueno had extended large sums to companies tied to its owners, beyond what the law allows and without enough collateral to cover the debts if they went bad. On a single day in September 2025, nearly $39 million had gone to three such companies. Pena repeatedly brushed off the warnings. As recently as last month, he defended Ueno and the central bank's oversight, dismissing the concerns as a smear campaign that was spooking the public.
But on Monday, it all came crashing down. Regulators investigating Ueno's loans to companies linked to its owners found poorly documented lending, the central bank said, as well as expenses the bank had wrongly counted as assets. Once the books were corrected, Ueno's capital, the cushion banks must keep to absorb losses, fell to less than half the legal minimum. The central bank seized the lender Tuesday and announced plans to move customers' accounts, along with whatever assets still hold value, to other banks before liquidating what's left. Ueno's app, cards and transfers went dark and its branches locked their doors, leaving desperate depositors lined up outside with no way to cash out their savings. On Wednesday, a rush to open new accounts elsewhere crashed other banks' mobile apps, fueling public panic. Officials say they had begun repaying depositors and opening accounts at other banks for the roughly 280,000 customers who had banked exclusively with Ueno.
"The banking system is sound," insisted Pedro Acosta Bernal, appointed interim central bank president Wednesday after Carvallo resigned at Pena's request.
Meanwhile, eight senior Ueno executives have been detained, including founder Miguel Vazquez and bank President Juan Manuel Gustale. "Prosecutors also charged 27 bank officials and business associates with offenses including breach of trust and attempted fraud," reports the AP.
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