Paraguay’s President Peña Resigns as Their Biggest Digital Bank Collapses, Leaving Millions Locked Out

Paraguay is facing a major political and financial crisis after the collapse of Ueno Bank (the country’s largest digital bank) froze millions of customer accounts. Regulators stepped in earlier this week, after its solvency ratio fell below half the required minimum. Its app, cards and transfers stopped working overnight. Millions of customers have since been unable to reach their money. President Santiago Peña announced his resignation on November 5 amid impeachment proceedings and scrutiny over his past ties to Ueno’s parent company.

However, Congress has yet to accept Peña’s resignation. He announced his decision as lawmakers debated impeachment charges against him. Minutes later, all 78 deputies present voted to advance the charges to the Senate. A joint congressional session ended without a decision after several lawmakers walked out. The Senate has since begun impeachment proceedings, with Peña saying he will defend himself. Removing him from office would require a two-thirds majority in the Senate.

Ueno’s Overnight Shutdown Freezes Savings and Public Pension Money

The first sign of trouble came early on Tuesday, when the Ueno app stopped showing balances. The central bank placed the lender into resolution, its strongest measure short of immediate liquidation. The Bank Branches closed, and crowds soon formed outside, hoping to withdraw their savings. Ueno had launched in 2021 and grown into the country’s largest digital bank with nearly three million customers. That base equals about 60% of Paraguay’s adult population.

The bank also held roughly $850 million in public funds. These included about $355 million from the Social Security Institute, which manages workers’ pensions and healthcare. The central bank has now started paying deposit guarantees in stages. The first repayment phase covers depositors with balances of up to 10 million guaraníes, equivalent to approximately $1,565. They must also have no debts with Ueno and hold an account at another local bank. Savers below that limit should recover their full balance, and later groups will be announced separately. The legal guarantee covers up to 75 minimum wages, or around 228 million guaraníes. People and companies linked to Ueno are excluded from it.

Peña’s Past Ties to Ueno’s Owner Drive Criminal Probes and Impeachment

Peña was a shareholder in Grupo Vázquez, the business group that owned Ueno, until 2025. He says he sold his stake and played no improper role in the bank’s affairs. However, opposition lawmakers accuse him of conflicts of interest, misuse of pension funds and institutional cover-ups. Those claims are allegations, not findings of guilt. The Attorney General has opened three criminal cases covering the bank’s supervision and the placement of public funds. Prosecutors say Peña is among those under investigation. Pressure also reached the central bank, whose chief, Carlos Carvallo, had previously led Ueno. He resigned on Tuesday, and the central bank says he stayed out of Ueno decisions.

Eight Ueno executives, including founder Miguel Vázquez, have been detained. Markets reacted quickly, as bond prices fell and the guaraní closed near 6,490 per dollar. Vice President Pedro Alliana, who is next in line, has distanced himself from Peña. Ultimately, Ueno’s collapse has turned a single bank failure into a test of Paraguay’s institutions. Depositors now depend on the staged repayments, while the courts must decide who bears responsibility. The country built its image on stability and an investment-grade rating. Restoring that trust will depend on how fast savers are repaid and how fairly the case is handled.

Web Resources on Paraguay banking crisis :

1. Reuters : Paraguay’s Peña resigns as bank collapse triggers political crisis.
2. BBC : Paraguay President Santiago Peña resigns after bank collapse.
3. Euro News : Ueno Bank collapse in Paraguay prompts President Santiago Peña to resign.
4. DW : Paraguay President Pena resigns amid bank crisis.
5. CNN : President of Paraguay faces criminal investigation and impeachment after bank collapse.