President Santiago Peña offered his resignation on Thursday, November 5, 2026, but Congress did not formally accept it. Instead, impeachment proceedings moved forward in the Senate, culminating in his removal from office on Friday, November 6.
The political crisis followed the collapse of Ueno Bank, which reported more customers than any other bank in Paraguay. On Monday, November 2, the board of the Central Bank of Paraguay (BCP) voted to take control of Ueno, and the takeover went into effect the next day. The bank’s app and cards stopped working, and its customers lost access to their accounts. On Wednesday, November 4, Congress passed an emergency law to accelerate repayments to depositors. On Thursday, November 5, the BCP announced the first stage of the repayment process for eligible depositors.
Paraguay’s institutions have held up through all of it, even if the political fallout will run for a while yet. The regulator and prosecutors acted within hours, and Congress removed the president through the impeachment process set out in the Constitution.
Expat Money has never recommended Ueno to clients as a place to keep their savings, and none of our real estate projects or partners in Paraguay have been affected. In this article, I will explain how Ueno failed and how its depositors are getting paid, and then look at Peña’s impeachment and what comes next for Paraguay.
Ueno Bank entered a regulatory resolution process in November 2026 following serious concerns over its solvency and lending practices.
Ueno started as a finance company and got its banking licence in late 2023. In 2024, it absorbed Visión Banco, and by October 2026, Ueno reported more than 3 million customers, which would make it the country's largest bank by customer count. It spent heavily on marketing. In March 2026, it sold $350 million USD in international bonds.
Ueno’s troubles started well before this week. In June 2026, bank inspectors found that Ueno appeared to have been lending to companies owned by Grupo Vázquez, the group that controls the bank. A bank lending to its own owners is one of the oldest warning signs in finance. Fitch cut its outlook on Ueno to negative in mid-October, citing how fast the bank’s balance sheet had grown.
After adjustments to its accounts, Ueno’s solvency ratio fell below half the legal minimum. On Monday, November 2, 2026, rumours spread that the BCP was about to step in, and Ueno told the public it was operating normally. The BCP's board voted unanimously that day to initiate the resolution process, which the regulator publicly announced on Tuesday, November 3. Ueno's services shut down overnight. Since the resolution process began on Tuesday, November 3, the regulator has been overseeing Ueno and determining how its assets and operations will be handled.
Prosecutors moved just as fast. By Tuesday evening, eight senior executives were in custody, among them CEO Miguel Vázquez and bank president Juan Manuel Gustale. Since then, 27 bank officials and business associates have been charged with offences including breach of trust and attempted fraud, and six executives have been placed in pretrial detention. None of them has been convicted, and the charges remain allegations.
The bank reportedly held more than $800 million USD in public funds, including deposits from pension and health institutions, raising concerns about the exposure of taxpayers’ money following its collapse.
According to the Associated Press, Ueno held more than $800 million USD in public funds, including money from pension and health institutions. Government deposits at Ueno climbed after Peña took office in 2023 and accounted for approximately 29% of the bank's total deposits at the end of June 2026, according to figures reported by Bloomberg. Paraguay's Social Security Institute (IPS) is among the public institutions with the largest financial exposure to Ueno. According to figures reported locally, IPS had approximately $345 million USD in funds deposited at Ueno, including certificates of deposit.
Ueno’s private customers chose the bank and took a risk with their own money. Workers who pay into IPS made no such choice. Paraguayan law requires salaried employees to contribute, and officials then placed hundreds of millions of dollars of that money in a young, fast-growing bank with ties to the top of the government. Carlos Carvallo, who was serving as BCP president when the bank entered resolution, had previously run Financiera Ueno until 2023. Peña owned shares in Ueno Holding until 2025, and Ueno says he never held shares in the bank itself.
Congress is already debating whether the deposit guarantee fund should cover public deposits in full. That proposal has gone to Senate committees and is not part of the emergency law. Business groups want small savers paid first, and they are right: a fund meant to protect households should not be drained to cover losses that came from the state's own choices about where to put its money.
Congress passed Law 7745 on Wednesday, November 4, 2026, and Peña signed it that night. It lets the deposit guarantee fund pay out an advance without waiting for the takeover to wrap up. On Thursday, November 5, the BCP announced the first stage of the repayment process for eligible depositors holding up to ₲10 million, with payments beginning on Friday, November 6. That is a rapid start to the process, although payments to other depositors will follow in subsequent stages. The amount and timing of your payment depend on your balance and eligibility. Some depositors will receive their full balance in the first stage, while others will receive payments under the wider guarantee arrangements. The table below explains the process.
|
Item |
What We Know |
|
Advance |
Up to ₲121.76 million (about $20,000 USD) per depositor. It counts toward the full guarantee and is not an extra payment. |
|
Timing |
The first payment group consists of depositors holding up to ₲10 million, with no debts to Ueno and an active account at another Paraguayan bank or finance company. These depositors will receive their full eligible balance. |
|
How You Get Paid |
Beginning November 5, eligible customers will receive instructions naming the bank that will handle their payment. An existing account at another Paraguayan bank will be used where possible. |
|
Debts Owed to Ueno |
Overdue debts are offset when calculating the statutory advance. The first payment group, however, is limited to customers with no debts to Ueno. |
|
Full Guarantee |
Up to ₲228.3 million (about $38,000 USD) per depositor, with all eligible deposits at Ueno counted together, rather than a separate guarantee for each account. The BCP estimates 97% of depositors are fully covered. |
|
Above The Limit |
Recovery depends on what the interveners can get out of Ueno's assets. No figures or dates have been given. |
I would be surprised to see Greece, Cyprus, or Spain move this fast. There is still work ahead. Depositors who meet the requirements for the first payment group are eligible to receive their full balances, while those with larger deposits must wait for subsequent stages of the repayment process. Customers with balances above the guarantee limit still face uncertainty over how much they will recover. Still, a government that passes and signs a payout law within 48 hours of the start of a bank's resolution process deserves credit for acting quickly, whatever else it got wrong.
On Tuesday, November 3, Peña asked BCP president Carlos Carvallo to resign, and Carvallo submitted his resignation. The following day, 35 deputies filed impeachment charges against Peña and Vice President Pedro Alliana, accusing Peña of a conflict of interest over his former shares in Ueno Holding and of misusing pension funds. His own Colorado Party then turned on him, and Senate President Basilio Núñez said publicly that he should step down.
Peña offered his resignation on Thursday, November 5, in a recorded video, saying he acted with “the stability of our country” and social peace in mind. He apologized but did not accept responsibility for the crisis. Congress did not vote on the resignation because the joint session collapsed for lack of quorum. Many lawmakers wanted a trial instead. Article 189 of Paraguay's Constitution provides for lifetime Senate membership for democratically elected former presidents, except those convicted through impeachment. The Chamber of Deputies then voted 78–0 to send Peña to trial. In a separate vote, deputies rejected the impeachment proposal against Alliana by 48 votes to 30.
On Thursday night, the Senate formally received the charges and constituted itself as the court that would try Peña. Colorado Party president Horacio Cartes was Peña’s political mentor, but he backed the impeachment, and Colorado senators lined up behind him. With support coming from both the opposition and members of the Colorado Party, Peña faced an increasingly difficult fight to remain in office.
The Senate resumed impeachment proceedings on Friday, November 6. Peña had requested an additional 72 hours to prepare his defence, arguing that he had not been given enough time to review the roughly 300 pages of accusations and evidence. The Senate rejected his request by 39 votes to three, with two abstentions. Peña did not attend the hearing in person, although his lawyers challenged the proceedings and argued that his right to a proper defence was being denied.
Later that day, the Senate voted unanimously among the 44 senators present to remove Peña from office for misconduct in office. Only 30 votes were required for his removal. One senator was absent. Peña became the second democratically elected Paraguayan president to be removed through impeachment since the end of the Stroessner dictatorship, following Fernando Lugo in 2012.
Vice President Pedro Alliana was sworn in as president on Friday to complete the term through August 2028. Although lawmakers had rejected the impeachment proposal against him, Alliana is also under investigation over the Ueno scandal.
The consequences for Peña did not end with his removal. Shortly after the Senate's decision, prosecutors placed him under house arrest on suspicion of breach of trust. Authorities also ordered the arrest of former BCP president Carlos Carvallo, although his custody status was not immediately clear. Because Peña was removed through impeachment rather than having his resignation accepted, he also lost his eligibility for lifetime Senate membership and the parliamentary immunity associated with it.
I have met Peña a couple of times. My view of Paraguay never depended on him staying in office, because what I watch is whether the institutions do their jobs. This week they did. The Central Bank took over Ueno even though its president at the time, Carlos Carvallo, had previously run Financiera Ueno. Prosecutors had the executives in custody within a day, and when Peña tried to resign, Congress pressed on with the trial anyway.
None of this excuses how Ueno grew so large with so much public money deposited in it. By the time regulators intervened, substantial public funds were already at risk. How much of that money can be recovered remains to be seen.
The BCP says Ueno's problems are specific to the institution and that its resolution process is intended to protect depositors and preserve the stability of Paraguay's financial system. Pedro Acosta Bernal took over as interim Central Bank president on Wednesday and insists the banking system is sound. The Paraguayan Banking Association says its members remain solvent and liquid. So far, I have seen no sign of stress spreading to other banks.
What I am still watching is scale. Ueno served more customers than any other bank in Paraguay. That means this failure potentially affects far more households than a typical bank failure would. Substantial public funds also remain exposed, and Congress is debating how the deposit guarantee arrangements should treat public deposits alongside those of private savers.
The BCP oversees the payouts. For now, the most useful thing you can do is prepare to follow the BCP's instructions and protect yourself against anyone trying to exploit the confusion:
Check the BCP's official website, www.bcp.gov.py, and its verified social media accounts for payment instructions. The BCP also has a dedicated page for Ueno deposit guarantee payments.
Check the BCP's official deposit guarantee payment page to find out which financial institution has been assigned to handle your payment.
Ignore anyone who contacts you offering a faster refund, and never share your password or card details.
If you had more than ₲228.3 million (about $38,000 USD) at Ueno, talk to a Paraguayan lawyer about claiming the rest.
If you do not have another Paraguayan bank account, follow BCP's instructions. The regulator says an account can be opened in your name at another financial institution to receive your payment.
If you had nothing at Ueno, you do not need to do anything. It is still a good idea to check how much you hold at each bank.
I've been a strong believer in Paraguay's potential for years, and despite the challenges the country is facing, my confidence in its long-term future hasn't changed.
The reasons I like Paraguay are still in place: territorial taxation, residency that ordinary people can actually get, and an open, growing economy connected to the world. None of those things depended on Santiago Peña becoming president, and none of them disappear because he has been removed from office.
A bank failed, substantial public funds were put at risk, and the president was removed from office through impeachment. These are serious events with real consequences, and I am not going to pretend otherwise. But how a country responds to a crisis tells you a great deal about its institutions. Paraguay's regulators acted, Congress moved quickly to protect depositors, and the constitutional process continued through to Peña's removal from office.
Bank failures can happen anywhere, and Ueno's collapse reminds you never to depend on a single bank. Keep your balance below the deposit guarantee limit and maintain a second local bank account so you can still pay your bills if one institution shuts its doors.
I've been positive about Paraguay for years, and that hasn't changed. My confidence in the country has never rested on one president or one political party. Paraguay's future is bigger than Santiago Peña, and one political crisis does not erase everything the country has going for it. We will continue to follow the situation closely and keep you informed.
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