How Paraguay’s Ueno collapse is only its latest banking crisis

What the report says

Paraguay is facing a major political and financial upheaval after the collapse of Ueno Bank, a large digital lender that had rapidly expanded after receiving a full banking licence in 2023, according to Al Jazeera. The report says President Santiago Pena is under impeachment pressure as critics focus on his past ties to the bank’s parent company, Grupo Vazquez, and on the government’s handling of public funds placed at the institution.

The bank was put into resolution by Paraguay’s central bank after regulators said its capital had fallen below the legal minimum. Al Jazeera reported that investigators found risky lending to insiders, including loans tied to the owner group, and that customer accounts were frozen, affecting millions of depositors. The bank had claimed about 3 million customers and managed hundreds of millions of dollars in public money, including pension and health fund investments.

Paraguay’s Congress moved quickly to create a state-backed repayment fund for depositors, with small accounts to be covered first and most customers expected to recover their balances under the guarantee cap. At the same time, prosecutors opened criminal probes and a judge ordered several executives detained pending trial, while others were placed under house arrest, according to the report.

Al Jazeera also placed the crisis in a broader national context, noting that Paraguay has experienced repeated banking failures in past decades and that the current episode is reviving long-standing concerns about insider lending, regulatory oversight and public trust in the financial system.