Officials at the Inter-American Development Bank's investment arm visited Paraguay's Ueno Bank SA in 2025, raising red flags over its lavish operations and rapid growth. The sleek Asuncion headquarters, nicknamed "The Matrix," contrasted sharply with the bank's poorest clients. IDB Invest considered an equity stake but halted plans after the visit.
Fifteen months later, the bank's swift collapse has destabilized Paraguay. Controlling shareholder Miguel Vázquez, one of the country's richest men, is jailed. President Santiago Peña offered resignation under impeachment threat.
The central bank director, a former Ueno official, resigned. Streets are filled with protesters demanding accountability. The lower house voted unanimously to impeach Peña; a Senate session to accept his resignation collapsed after lawmakers walked out.
Peña will present his defense Friday. The crisis undermines President Donald Trump's Latin America influence efforts. Secretary of State Marco Rubio had cited Paraguay as a model, praising its loyalty to Taiwan.
Treasury Secretary Scott Bessent met Peña just two weeks prior. Peña recently defended Ueno's oversight. Ueno was a digital-first fintech credited with bringing impoverished newcomers into the formal financial system.
It became Paraguay's sixth-largest bank by deposits after merging with Visión Banco in 2024 and pushing for government funds. Public-sector deposits surged to roughly 5 trillion guaranies ($869 million) under Peña. Early Tuesday, regulators seized the bank, declaring it insolvent and undercapitalized.
Police raided Vázquez's mansion, finding luxury cars worth over $1.4 million. Deposit insurance guarantees up to $38,000. Over 1 million of Paraguay's 6 million people opened their first bank account through Ueno.
Even World Cup heroes are affected, trying to recover deposited funds.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing