Paraguay’s President Resigns as Ueno Bank’s Solvency Falls Below Half the Legal Minimum
Key Facts
Paraguayan President Santiago Peña resigned on Thursday, November 5, saying his decision was intended to protect stability, social peace and democratic institutions, amid a Ueno Bank crisis that had turned into a political confrontation. Minutes after the resignation was announced, the lower house voted unanimously, 78 votes to zero, to refer impeachment proceedings to the Senate. The Associated Press said a vote to accept the resignation remained disputed, and congressional leaders planned to continue voting on Friday, November 6. Two tracks therefore converged in Congress: consideration of the president’s resignation and the continuation of impeachment proceedings against him. The political crisis came as the bank’s services were disrupted and authorities faced questions over its oversight and the handling of public funds.
The central bank announced on November 3 that it had begun the resolution of Ueno Bank, after its solvency ratio fell below 50% of the required legal minimum. The central bank said the decline emerged after adjustments to financial data, while the Associated Press reported that a central bank review found weak loan documentation and expenses incorrectly counted as assets. The central bank had warned Ueno in June against lending large sums to companies linked to its owners, according to the agency. This puts the causes of the financial failure and oversight of lending at the center of the ongoing investigations. The central bank said the resolution aims to protect depositors and preserve financial system stability, stressing that the case concerns the bank and does not reflect the overall state of Paraguay’s financial system.
The public prosecutor’s office said it had ordered 3 criminal investigations into the Ueno crisis, covering government oversight of the bank, how its failure was handled, and the deposit of public funds with it. The Associated Press reported that Peña said he would cooperate with investigators. The president also canceled a planned trip to an international summit in Spain and requested the resignation of central bank chief Carlos Carvallo, the agency reported. Peña and congressional leaders agreed to fast-track legislation allowing depositor claims to be paid and ensuring the return of public funds. These moves coincided with divisions within the ruling party: the party’s vice president called for Peña’s expulsion, while the Senate president defended him and blamed the central bank. This widened the crisis from addressing the bank’s situation to holding state institutions and political leaders accountable.
Ueno’s apps, cards and transfers stopped working, and its branches closed, according to the Associated Press. The state guarantee scheme provides for depositors to be repaid within 5 business days, and payments began on Thursday, November 5, with small accounts of up to about $1,600. The central bank set the first payment for depositors whose balances do not exceed 10,000,000 guaraníes, provided they owe no debt to the bank and have an account at another bank or financial institution in the country. The deposit guarantee cap is 228.300.000 guaraníes per depositor at the institution, not per individual account. The agency said the insurance cap, about $36,000 per customer, covers the full balances of an estimated 97% of the bank’s customers. These arrangements set out the scope of compensation and the conditions for payments to begin, while the handling of balances within the guarantee cap remains tied to the resolution process.
Ueno had more than 3 million users, or over 65% of adults in Paraguay, according to an open letter the bank published before the crisis. That reach provides context for the scale of the service disruption after the app, cards and transfers stopped working and branches closed. The bank said in the letter that its net income was about $37 million in the first half of 2026, compared with $14 million in the same period of 2025. But the central bank said the solvency ratio had fallen below half the required minimum, and the Associated Press cited a review that found poorly documented loans and expenses incorrectly counted as assets. The labor ministry also estimated that the crisis affected about 7,000 direct and indirect jobs at the bank and related companies. Ueno managed between $800 million and $850 million in public funds, including about $380 million in investments for the state pension and health fund, according to the agency.
The crisis spread to other banks on Wednesday, when a rush by customers to open new accounts there disrupted their apps and heightened public concern, according to the Associated Press. In markets, the Tether-to-dollar pair recorded daily closes ranging from $0.99801 on October 29 to $0.99989 on November 1, before closing at $0.99893 on November 4, according to EL7 data. These prices relate to the Tether-to-dollar pair and do not measure a peer-to-peer trading premium in Paraguay. The claim that the premium rose by 13%, or that it was linked to the crisis, could not be verified. The next scheduled political development is for congressional leaders to continue voting on Friday, November 6, on whether to accept Peña’s resignation, as depositor guarantee payments and criminal investigations into the bank crisis proceed.