Who is the 36-year-old behind the Ueno Bank disaster, the banking scandal that has rocked Paraguay?

Santiago Peña Palacios is a brilliant 48-year-old economist who, after working at the International Monetary Fund and the Central Bank of Paraguay, was appointed to the Ministry of Finance by President Horacio Cartes in 2015. A direct descendant of José Gaspar Rodríguez de Francia – who served as dictator from 1813 to 1840 and is, depending on one’s historical perspective, remembered as either a hero of Third Worldism or a terrible tyrant – he had always been a member of the Authentic Radical Liberal Party, one of Paraguay’s two traditional parties. However, he then decided to switch to Cartes’s Colorado Party, which subsequently chose him as its heir apparent, with a view to him becoming president on 15 August 2023. 

Federico Miguel Vázquez Villasant, who, according to his own account, did not graduate because he had fallen out with ‘far-left’ professors, is the prodigious 36-year-old entrepreneur who, by founding Ueno Bank, had dreamt of creating his country’s first ‘unicorn’ and of taking a Paraguayan company to the New York Stock Exchange for the first time. Backed by Peña, Vázquez had carried out what appeared to be a remarkable feat of financial inclusion in a poor country that has always had a strong informal economy, to the extent that he reached 2.9 million current accounts out of a population of 6.1 million.  

Now it’s all fallen apart: Vásquez is in prison, and Peña is about to end up there too. To avoid this, after his former mentor Cartes had distanced himself from him, he offered his resignation, which would have allowed him to become a life senator, with the associated parliamentary immunity. However, with account holders protesting in the streets and former Ueno Bank employees publicly burning their staff ID cards in protest, MPs from his own party walked out of the Chamber of Deputies sitting that was due to accept his resignation, thereby preventing a quorum from being reached. Immediately afterwards, the Chamber reconvened to vote on bringing charges, which was passed unanimously. The decision on his removal now rests with the Senate, where thirty votes out of forty-five are required, though unanimity is again anticipated.

“Ueno” sounds almost like the Spanish word “bueno”, meaning ‘good’. The bank was valued at nearly $500 million at the start of this year, and Vázquez’s stake alone was worth up to $375 million, which probably made him one of the richest people in one of Latin America’s poorest countries. Vázquez, an only child, had a maternal grandfather who owned the local Mercedes-Benz dealership, whilst his paternal grandmother sold food from a market stall where his father set up a microcredit business aimed at people without access to the banking system (https://www.grupovazquez.com/nuestra-historia/). He had transformed that business into Ueno Bank in 2023. But Vázquez is also the majority shareholder of a holding company with 6,000 employees and a turnover of over 100 million dollars. His shareholdings had more than tripled since 2020, reaching 28 by the end of last year, and the company’s headquarters is known in Asunción as ‘La Matrix’. As a triathlete, runner and racing driver, Vázquez often compared his entrepreneurial style to a sporting competition, and with this in mind, Ueno Bank had sponsored not only the national football team – which knocked Germany out of the last World Cup – but also the country’s two most popular football clubs.  

Between 2019 and 2025, Santiago Peña had also invested in one of Ueno’s companies, which was granted a banking licence less than three years ago. This was shortly after he took office as president. Under his leadership, government deposits with Ueno grew rapidly, rising from less than $100 million in January 2024 to account for around 20 per cent of all state savings held in the banking system by the end of September, including hundreds of millions of dollars from the social security fund. In turn, the governor of the central bank, Carlos Carvallo, who authorised the licence, had previously worked for Vázquez as director of the institution that later became Ueno. Carvallo also resigned shortly after the bank was closed down: a measure imposed by the Central Bank after it discovered that the solvency ratio had plummeted to just over half the legal minimum. “We cannot display the balance” – this was the message that suddenly appeared on the bank’s app on Tuesday, sparking panic. For the time being, the Central Bank itself has undertaken to reimburse up to a maximum of 1,675 dollars.