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When Ueno Bank celebrated its transformation into a bank at the end of 2023, its managers boasted about their numbers.
They claimed that the entity, which was relatively new, already had more than 500,000 clients and that they had managed to incorporate into the financial system some 140,000 people who previously did not have a bank account.
It was a notable achievement for an institution that just two years earlier was a small financial institution specializing in technology.
"This is just beginning," boasted Juan Manuel Gustale, then president of Ueno Bank, during celebrations at the Ueno SND Arena in Asunción.
Less than three years after that statement, the story takes an unexpected turn.
This Tuesday, the Central Bank of Paraguay (BCP) announced the start of a dissolution procedure for Ueno Bank after determining that its solvency ratio had fallen below half of the minimum required.
The news took many by surprise. Just a few weeks before the intervention, Ueno Bank was presented as the great success story of the Paraguayan financial system.
The case has shaken not only the Paraguayan financial system, but also the highest levels of political power. Both President Santiago Peña and the head of the Central Bank, Carlos Carvallo Spalding, have come under scrutiny for their past ties with the bank and its business group.
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The crisis escalated on Wednesday, when opposition lawmakers gave new impetus to their attempts to oust Peña, whom they blame for the collapse of Ueno Bank, which left millions of customers without access to their accounts.
Opponents accuse the president of incurring conflicts of interest, allowing the misuse of pension funds and covering up irregularities in the management of the banking crisis.
This Thursday, the Chamber of Deputies will vote on whether to admit the accusation against Peña and give way to an impeachment trial for his alleged responsibility in the case. For the process to advance to the Senate, two-thirds of the votes of the deputies present are needed.
In bad news for the current president, Horacio Cartes, former president of Paraguay and leader of the ruling Colorado Party, announced that the ruling party will support the impeachment against him.
"We will not be on the side of the theft of public, private and retiree funds, we must think about the people and the values that we uphold from the Colorado Party. We support the impeachment of the President of the Republic, Santiago Peña, in order to redirect the institutions of the Republic," he said in a statement.
In September 2026, Ueno Bank claimed to have more than three million clients in a country of 6.5 million inhabitants, which would be equivalent to almost two out of every three Paraguayans.
It also claimed to process more than three million transactions a day.
Its dissolution now raises questions about how an entity that experienced such accelerated growth in such a short time ended up in this situation.
Orkun Saka, professor and researcher of financial economics at City St George's, University of London, maintains that the Ueno Bank case goes far beyond the mismanagement of a financial institution.
"Let's be clear about what happened. A bank belonging to a single business conglomerate ended up concentrating the savings of the majority of the country's adults, in addition to hundreds of millions of dollars in pension funds," he tells BBC Mundo.
Saka points out that the Central Bank had already warned, months before the collapse, about the "excessive loans that the bank granted to companies linked to its own owners."
"And yet, public funds continued to arrive. This is not simply the story of a poorly managed bank. It is a system in which the bank, the regulatory body and the Presidency were so closely linked that none seemed able to set limits on the others," he adds.
BBC Mundo contacted the Presidency of Paraguay to request comments on the case, but had not received a response at the time of publishing this article.
The origins of Ueno Bank
The origins of Ueno date back to 1976, with the founding of Financiera El Comercio.
After 45 years of operations, the financial company was acquired by the Vázquez Group in April 2021, an operation that was authorized by the BCP in September of that year.
Two years later it obtained authorization to become Ueno Bank, thus joining the Paraguayan financial system.
The nascent bank was consolidated in 2024 with the absorption of Visión Banco, an operation that added more than one million clients, an extensive network of branches and one of the largest deposit bases in the Paraguayan financial system to its portfolio.
image source, Reuters
Ueno Bank is still majority controlled by the Vázquez Group, one of the most important business and industrial conglomerates in Paraguay, chaired by businessman Federico Miguel Vázquez Villasanti, who made himself available to judicial authorities on Tuesday after the Prosecutor's Office ordered his capture.
Among those arrested are also Juan Manuel Gustale, president of Ueno Bank; Julio Rey Fernández, vice president; Mariana Torres Rubiani, main director; and the members of the board of directors Diego Duarte Schussmuller and Alejandro Gómez Abente, Diana Leticia Mongelós González, second vice president of the entity, and Miguel Ángel Almada Frutos, an executive linked to Ueno Seguros and the Vázquez Group.
His links with the government
Many critics have focused on the links between Ueno Bank and sectors of political power, especially on President Santiago Peña's relationship with companies linked to the group that controls the banking entity.
Peña was listed as a shareholder of Ueno Holding, made up of companies such as Ueno Seguros, itti and the Vázquez Group, the main shareholder of Ueno Bank.
In early 2025, the Paraguayan president stated that he had ceased to be a shareholder in the holding company and denied any ties with the bank.
"I was an investor, I am an economist, I specialized in Finance, I made an investment six years ago in the house of Credi Centro, which eventually became Ueno Holding, it was never the Ueno bank, I have no connection with the Ueno bank," he declared to a group of journalists in April 2025.
Many also question the role of Carlos Carvallo Spalding, who offered his resignation as president of the Central Bank of Paraguay amid the controversy.
Before assuming that position in August 2023, Carvallo had been president of Financiera Ueno.
Economist Orkun Saka warns that these types of links can seriously undermine the credibility of a country's institutions, even when irregularities have not been proven.
"Regulation depends on society trusting the impartiality of whoever must supervise. When the president of the Central Bank previously ran the bank that he is now responsible for overseeing and the president of the country was a business partner of its owners, that trust is broken. In that context, even if the decisions were technically correct, it will be difficult for people to believe that they were."
Saka adds that the loss of trust can be one of the most costly and long-lasting consequences of a financial crisis like this.
Quick transformation
The process of transforming Ueno into a bank culminated in November 2023, when the Central Bank of Paraguay (BCP), chaired by Carlos Carvallo Spalding, approved it.
This decision came just three months after Carvallo took office and the arrival of Santiago Peña to the presidency.
The relationship of trust between the two was evident on several occasions. One of them was during Carvallo's inauguration ceremony, when the then Minister of Economy, Carlos Fernández Valdovinos, publicly praised him and stated that "not only is he a good person and a good professional, he is above all a great friend."
"Neither I nor President Peña can think of better hands to take charge of the BCP from now on and do everything we want and should do for all Paraguayans in these five years," he added.
Transfer of public funds
Shortly after its entry into the banking market, Ueno Bank began taking deposits from public organizations.
At the time of his intervention, Ueno managed around US$850 million in public funds. Among them were resources from the Social Security Institute (IPS), including funds destined for retirements, pensions and other social benefits.
The opposition claims that the links deserve greater scrutiny.
Opposition senator Rafael Filizzola has called the case "the biggest scam from the political power of the democratic era."
"It is a bank created from political power, to use public money in private businesses, linked to political power, with the President of the Republic at the head," he told 1020 AM radio.
He also assured that the amount in the case could be "something like US$3 billion, according to what we know."
Meanwhile, Ueno Bank customers are following the case with concern. Some have taken to the streets to protest, while waiting to know when and how much of their savings they will be able to recover.
The Deposit Guarantee Fund covers up to 228.3 million guaraníes (about US$38,000) per saver.
The authorities stated that the first payment, of up to 121.7 million guaraníes, has already begun to be processed, but those who have deposits greater than that amount are still waiting to know when and how they will be able to recover the rest of their money.
Saka warns that the consequences of this crisis could extend far beyond the coming weeks.
"The real test is not in what happens in the coming days, but in how the crisis is managed in the coming years," he says.
"If the measures adopted serve to protect savers and taxpayers or if they end up benefiting, once again, those with connections to power."
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