Paraguay's Week Of Reckoning: What The Headlines Missed

Hey guys, Mikkel here,

A bank has collapsed, a sitting president has been impeached and removed from office, the former head of the Central Bank is under investigation, and hundreds of millions of dollars in public and pension-related funds have been exposed… and millions of everyday Paraguayans were left without access to their funds.

Far from the positive developments we are used to seeing come out of Paraguay…

Needless to say, I understand why my inbox has been filling up with questions about what happened, whether this is an isolated failure or something more serious, and what it means for those of us with investments in Paraguay.

The initial wave of media coverage was chaotic. Much of what was reported was complete nonsense. 

The headlines jumped between a bank collapse, a potential national banking crisis and the completely unsubstantiated possibility of a wider economic meltdown.

I've been following the reporting closely, and I am glad to see the initial sensational coverage has gradually given way to more measured reporting that paints a clearer picture of what actually happened. 

Credible outlets are now (rightfully) distinguishing between the actual failure at Ueno and the institutional weaknesses that enabled it, rather than partaking in “click-farming” by using
sensationalized headlines to capture readers' attention. 

Reporting supported by proper facts and context is what I want people paying attention to. That’s exactly how I am going to present the reality of the situation to you today. 

Without further ado, allow me to explain what happened with Ueno Bank, the political and financial fallout, what the immediate response can tell us, and why my long-term assessment of the country remains unchanged.

Let's get into it, 

The Bank That “Looked Like The Future” Had A Very Different Story Behind Its Balance Sheet

Ueno was one of Paraguay's fastest-growing digital banks. Its market entry and subsequent growth were nothing short of extraordinary.

Its digital banking operations were established in 2023, and it embarked on an aggressive expansion campaign that quickly made it one of the most recognizable financial brands in the country.

It belonged to Grupo Vázquez (a powerful Paraguayan business conglomerate), and rapidly grew to approximately 2.9 million customers in a matter of a few years. 

Its strategy centred on convenience, technology, and an exceptionally visible marketing operation.

Fancy mobile apps, premium credit card partnerships, airport lounges, football sponsorship… all the bells and whistles that tend to impress consumers who may associate a slick brand and mass presence with being a financially sound institution.

The bank attracted substantial deposits from public institutions, pension-related organizations, and government entities and rose to become a significant player in Paraguay's financial system.

By September 2026, Ueno accounted for approximately 9% of the country's banking deposits and 8% of its outstanding loans.

This is where the problems began: 

The impressive public image and rapid expansion were not matched by the financial strength and risk management necessary to sustain the business.

Ueno was, in many respects, a new-age banking operation.

It understood branding, customer acquisition, technology, and the importance of making banking feel modern and accessible, but it apparently lacked the financial discipline needed to support its rapid expansion. 

The subsequent investigation suggests that Ueno’s rapid growth and highly visible public image were not supported by sufficiently strong lending practices, capitalization, risk management, and oversight. 

I've seen businesses in all sorts of industries become very good at selling the appearance of success while the underlying economics tell a completely different story. 

It’s natural to assume these practices wouldn’t make their way into the institutions responsible for keeping our funds safe.

This situation clearly tells us that the banking industry is no exception.

On November 3, 2026, Paraguay's Central Bank announced that it had initiated formal resolution proceedings against Ueno Bank after identifying a critical deterioration in its financial position.

After adjustments to the bank's financial statements during the regulatory review, its solvency ratio fell below 50% of the minimum legally required level. 

In other words, the bank's capital position was so compromised that it no longer met even half of the minimum solvency requirement.

Here is how things unfolded (current as of November 9, 2026):

Ueno Bank: From Rapid Growth To Financial Collapse - A Timeline Of Events (Current as of November 9, 2026)

• April–June 2026. Regulators identify questionable lending: The Paraguayan Central Bank identifies concerns about excessive lending to companies connected to the bank's parent company, Grupo Vázquez, including loans allegedly exceeding regulatory limits and transactions involving inadequate guarantees and questionable documentation.
  

• June–September 2026. Regulatory warnings intensify: Investigators examine the transfer of approximately $74.4 million USD in related-party loans to Vinanzas, a transaction allegedly financed indirectly using money originating from Ueno itself. Formal supervisory proceedings begin in September.
  

• August–October 2026. Public money continues flowing into Ueno: Investigators examine substantial public-sector investments and deposits at the bank. By September, Ueno represented approximately 9% of Paraguay's banking deposits and 8% of outstanding loans.
  

• October 29, 2026. A $100 million USD rescue plan is announced: Ueno's shareholders announce an emergency capitalization plan intended to strengthen the bank's financial position. It ultimately fails to prevent the collapse.
  

• November 2–3, 2026. The Central Bank intervenes: Regulators determine that Ueno's solvency ratio has fallen below half the legally required minimum. Resolution proceedings begin on November 3, suspending banking services and affecting approximately 2.9 million customers. Central Bank president Carlos Carvallo resigns.
  

• November 3–4, 2026. The scale of the financial exposure emerges: Approximately Gs. 3.608 trillion ($575.6 million USD) and an additional $233.4 million USD in public and pension-related funds are identified as exposed to Ueno.
  

• November 4, 2026. Emergency depositor legislation is approved: Congress unanimously approves legislation allowing eligible depositors an initial advance of up to US$20,000. The existing deposit guarantee of approximately $38,000 USD per depositor, per institution remains in place (covers an estimated 97% of Ueno's depositors).
  

• November 5–7, 2026. Repayments begin as political pressure escalates: The Central Bank begins returning eligible deposits. By November 7, approximately $160 million USD had been distributed to nearly 1.2 million depositors. Meanwhile, prosecutors charged 27 people connected to Ueno and associated companies.
  

• November 5–6, 2026. Peña resigns and is removed from office: Facing impeachment proceedings, Peña submits his resignation, but Congress proceeds with impeachment instead. On November 6, he was removed from office, and Vice President Pedro Alliana was sworn in as president.
  

• November 7, 2026. Criminal proceedings reach the former president: A judge orders Peña into pretrial detention at a military facility in Asunción. Former Central Bank president Carlos Carvallo is also detained as the investigation expands.
  

• November 9, 2026. The investigation and financial fallout continue: Approximately $160 million USD has been paid out to nearly 1.2 million depositors, although customers with balances exceeding the guarantee limit still face uncertainty. Investigations into Ueno's lending practices, public-sector deposits, regulatory oversight and political connections continue. 

Full disclosure: I personally have money tied up in this Ueno situation, and I fully expect to take losses on some of those funds. So I am not looking at this purely as an outside observer. I have a personal financial interest in understanding exactly what happened and how the resolution process unfolds. 

Prosecutors have identified alleged lending practices that appear to have allowed the bank to channel enormous amounts of money into related businesses, sometimes through complicated arrangements involving multiple companies owned by the same parent company. 

We're talking about loans and overdrafts that allegedly exceeded appropriate lending limits, were extended to companies without sufficient financial capacity, and were supported by inadequate guarantees and questionable documentation.

In several instances, investigators allege that money lent to one company was transferred almost immediately to another related company to cover existing obligations, repay other loans, or finance transactions that had little connection to the original purpose of the financing.

Financial gymnastics, most certainly.

Shady, big time.

Whether those actions crossed the line into criminal conduct is now a matter for the courts. 

The investigation is ongoing, but there's already more than enough information to understand why this has become one of the most significant financial scandals in Paraguay's recent history.

The fact that so much of this money ended up concentrated in one institution, particularly one that was already experiencing serious financial difficulties, deserves a thorough examination.

What due diligence was performed?

Were the risks properly assessed?

Were the people responsible for managing these funds aware of the bank's deteriorating financial position?

Did anyone knowingly make decisions that benefited connected parties at the expense of depositors or public institutions?

Let’s see what the courts have to say…

When private investors make a poor investment, they accept the consequences of their own decisions. 

When public institutions make poor decisions, or decisions later found to be unlawful, the consequences extend to people who reasonably believed their money was safe. 

Paraguay has worked hard to establish itself as a credible destination for foreign capital. Protecting that reputation requires more than attractive tax rates and a few good economic indicators.

It requires people to trust that the rules are being followed and that institutions responsible for safeguarding money are doing their jobs… there is no sugarcoating this:

This was a massive breach of trust, and that trust will need to be rebuilt.

I am hopeful that the weaknesses exposed by Ueno will lead to meaningful regulatory reform and that consumer confidence can be restored quickly. 

The Political Fallout: Peña Is Out… But Paraguay's Future Is Bigger Than One Man

I've met former President Santiago Peña a couple of times over the years, and I've always applauded his efforts to attract foreign investment, promote Paraguay as a destination for business, and position the country as one of Latin America's more attractive emerging markets.

I believe he understood many of the economic advantages that make Paraguay such an interesting (and investable) country, and he was effective in unleashing “Paraguay’s potential” and communicating its advantages globally. 

However, my assessment of Paraguay has never depended on him occupying the presidential palace.

The allegations surrounding his involvement with Ueno Bank and his financial relationship with Grupo Vázquez and its associated businesses are now receiving extensive scrutiny.

The allegations are serious, and every one of them deserves to be thoroughly investigated. Where wrongdoing is proven, those responsible should be held accountable. 

I want to see the people responsible held accountable, regardless of their political connections, business relationships, or previous positions in government.

Paraguay needs strong institutions, transparent oversight, and a financial system that people can trust. 

No one is above the law. No exceptions.

Now, Peña may have been the president, but he was never the reason Paraguay became an attractive place to invest in the first place.

The country's economic advantages existed long before he entered office, and they'll continue long after he's gone.

In fact, there's a reason Paraguay has taken a very different economic direction from many of its neighbours, and it's rooted in more than the political ambitions of any one president or political party. 

Paraguay has a broadly conservative political culture, and its political mainstream has historically favoured a market-oriented economic model.

The Colorado Party, which has dominated Paraguayan politics for much of the country's democratic history, has generally supported fiscal stability, low tax rates, private enterprise, and policies intended to attract investment and encourage economic development.

I believe a substantial part of Paraguay’s political mainstream continues to favour policies that encourage private investment and economic growth. 

Here’s what I mean…

Paraguay understands something many governments seem to have forgotten: you can’t build a prosperous country for your citizens by making it hard for productive people to build a good life. 

You need entrepreneurs willing to take risks, businesses willing to expand, investors willing to commit capital, and employers willing to hire people.

You need an environment where people can see a reasonable return on the time, money, and effort they put into building something.

Paraguay has significant opportunities to develop its natural resources, expand manufacturing, improve infrastructure, and build a more sophisticated economy. 

The government doesn’t have to manufacture opportunity; it needs to create the conditions in which opportunity can flourish. 

The more attractive a country becomes to productive capital, the more businesses it can attract, the more people those businesses can employ, and the more money flows through the wider economy.

I believe many Paraguayan voters understand this philosophy because they've seen the benefits of a pro-business environment, and I expect that preference to remain an important influence on the country's economic direction.

That's why I'm not concerned that Peña is no longer president when evaluating Paraguay's long-term economic prospects.

Of course, I want to see what the new administration does, and I am hopeful they will restore confidence, reinforce the credibility of Paraguay's institutions, and demonstrate that the failures exposed by Ueno will not be allowed to continue.

However, I strongly disagree with any sentiment that this incident disrupts the fundamental economic philosophy that has helped Paraguay attract foreign capital and build its productive economy.

The country's energy resources haven't disappeared.

Its agricultural sector hasn't stopped producing.

Its strategic position in South America hasn't changed.

Businesses operating throughout the country haven't suddenly lost their customers, employees, or reasons to keep investing.

Those advantages were never Peña's.

They belong to Paraguay.

I believe many Paraguayans understand that their future prosperity depends on maintaining an environment where businesses can grow, and private capital can be put to productive use. 

One president may have fallen, but the economic advantages that brought me to Paraguay in the first place remain very much intact.

My conviction in the country's future remains unchanged.

Now… Is The Ueno Collapse Indicative of a Larger Issue?

“Mikkel, I own four rental properties in Paraguay. Is what happened to Ueno Bank an isolated event, or could this threaten my investment holdings?”

This is probably the question I've received more than any other.

There is currently no evidence suggesting that Paraguay's banking system as a whole is insolvent or that Ueno's alleged practices are widespread across the sector. 

The Central Bank has maintained that the issues are specific to Ueno.

Both Standard & Poor's and Moody's have weighed in. Neither has downgraded Paraguay's sovereign credit rating. 

S&P maintains Paraguay at BBB- with a stable outlook, while Moody's maintains its Baa3 investment-grade rating with a stable outlook.

The ratings agencies are essentially telling us that Paraguay's macroeconomic fundamentals remain strong enough to support its existing sovereign ratings.

It's worth remembering that both agencies only recently upgraded Paraguay to investment-grade status (Moody's did so in July 2024, approximately 28 months ago, while S&P followed in December 2025, less than 11 months ago). 

A country's economic fundamentals can be strong while its institutions still require improvement. Both things can be true at the same time.

The Banking Lesson That Applies Regardless Of Which Country You Call Home

There's something I want to address that I believe is relevant to everyone reading this, whether or not you have investments in Paraguay.

Opening a bank account in another country does not automatically eliminate your banking risk.

I have been talking about banking diversification for years, and situations like this are precisely why.

If you've deposited most of your liquid wealth with one financial institution, you haven't diversified away your banking risk. 

Let's go back to March 2023, when Silicon Valley Bank collapsed in the United States.

SVB was a major American financial institution with approximately $209 billion USD in assets at the end of 2022.

It had an enormous reputation within the technology and venture capital communities, serving some of the most sophisticated businesses and investors in the country.

Yet, after announcing substantial losses on its securities portfolio and plans to raise additional capital, confidence evaporated, leading to what is referred to as a run on the bank. 

In a single day, approximately $42 billion USD was withdrawn, with another $100 billion USD in withdrawal requests reportedly lined up for the following day.

The bank could not meet the sudden demand for withdrawals, despite operating within the U.S. regulatory framework (which raises a bigger question about the leeway banks are given to lend relative to the amounts they have access to, but that’s a discussion for another day). 

The circumstances surrounding Silicon Valley Bank are much different from those surrounding Ueno; however, I tell you this to demonstrate that banking risk exists everywhere.

It doesn't matter whether you're dealing with a financial institution in the United States, Canada, Switzerland, Paraguay, or anywhere else.

Every bank has a balance sheet, every bank makes lending decisions, and every bank is exposed to risks that customers rarely think about when they open an account.

This is why you should structure your financial affairs so the failure of any one institution doesn't jeopardize your entire financial position.

I encourage everyone to establish and maintain banking relationships with more than one reputable financial institution, understand the applicable deposit guarantee limits, avoid concentrating excessive liquidity in one place, and consider how different types of assets fit into their broader financial picture.

What The Headlines Are Neglecting To Mention… 

Now, let's get to the part that I know many of you are most interested in…

“Am I, Mikkel Thorup, still bullish on Paraguay?”

Unwaveringly, yes.

It’s quite straightforward:

I don't invest in a country because of its president. I invest because I believe in that country's underlying advantages and the opportunities those advantages create.

Leadership matters, of course. Good policymakers can help a country make the most of its advantages, and poor leadership can do the opposite.

But if your entire investment thesis depends on one person remaining in office, you haven't built a particularly resilient investment strategy.

I've been to Paraguay more times than I can count over the past several years.

I've invested millions of dollars there alongside my long-standing partners, helped hundreds of people establish residency in the country, introduced my community of investors to real estate opportunities, and spent hundreds of hours on the ground learning firsthand how the country operates and where the best opportunities are. 

My conviction has always been based primarily on the fundamentals (barring some unprecedented shift to communism, of course). 

Consider what Paraguay has to offer…

First, its energy position is extraordinary.

Paraguay is one of the world's major hydroelectric power producers, thanks to the Itaipú and Yacyretá dams.

Its electricity generation is effectively 100% renewable, giving the country a considerable advantage as energy-intensive industries, data centres, manufacturing operations, and other commercial activities seek locations with reliable, competitively priced power.

This isn't some short-lived political initiative that can be reversed with the stroke of a pen.

It's a structural advantage rooted in geography, natural resources, and infrastructure that has taken decades to develop.

Second, Paraguay is an important agricultural and industrial producer.

The country has a substantial agricultural export economy, particularly in soybeans, beef, and other commodities, and its productive capacity gives it an important role in regional and international trade.

Its agricultural sector isn't going anywhere because a president leaves office.

The land remains productive, the rivers continue flowing, and the country's ability to produce and export goods remains an important part of its economic proposition.

Third, its geographic position is becoming increasingly valuable.

Paraguay is landlocked, which has historically created logistical challenges, but the country has been investing in infrastructure to improve access to regional trade routes and international markets.

The Bioceanic Corridor is a particularly important example.

This major infrastructure project is designed to connect the Atlantic and Pacific sides of South America, passing through Paraguay and creating new opportunities for exporters, logistics companies, manufacturers, and businesses that depend on efficient regional transportation.

Or, to put it briefly: Paraguay still has energy resources, productive land, and a strategic position, and those geographical advantages can’t be stripped away. 

A Final Word…

I've never encountered a country where everything works perfectly all the time. I live in the real world. 

When I first began getting serious about investing in Paraguay, and helping families like yours and individual investors do the same, what I was looking for were structural advantages that could support economic development over decades. 

I found those things in Paraguay.

Paraguay still needs better institutions, stronger financial supervision, greater transparency, and greater accountability from those entrusted with public responsibilities. 

I would argue that the events of the past week have made those priorities even more obvious.

However, I also believe the country has an opportunity to emerge from this situation with a stronger regulatory framework that will benefit depositors, investors, public institutions, and the credibility of its financial system.

This has been a serious reminder of banking risks and the consequences of weak oversight.

I want people to understand those risks, conduct proper due diligence, diversify their banking relationships, and make investment decisions based on the actual fundamentals rather than whatever headline happens to be circulating that morning.

I also have a personal interest in getting to the bottom of this. 

Our real estate projects remain unaffected by the Ueno situation, and I have received no indication of any impact on our completed, in-progress, or pre-construction residential or commercial projects. 

If something will directly impact members of our community, or genuinely changes my assessment of Paraguay, you'll hear it from me.

My responsibility is to give you an honest assessment of the jurisdictions I discuss, including the good, the bad, and the uncomfortable.

I've developed relationships with experienced developers who have been operating in Paraguay
for well over a decade, and who have experienced multiple administrations, economic cycles, political changes, and all the usual frustrations that come with building a business in a developing market.

I've spoken with both Markus and Fernando (both of whom many of you already know and have worked with) over the past several days, and I've asked them to make themselves available to speak directly with our existing clients, as well as anyone who is curious about what's happening in Paraguay and wants to understand the situation from people who are actually operating there.

Both have agreed.

If you're an existing client, or even someone who is just curious about the situation (or the opportunities that may emerge as a result), I'd encourage you to take advantage of this opportunity by sending them an email using the respective links below:

Contact my trusted partner, Markus Amann, at: [email protected] 

Contact my trusted partner, Fernando de Cevallos, at: [email protected]

You can speak directly with Markus about his perspective on the political transition, the property market, the investment environment around Asunción, and what he believes the next several years could look like.

You can also speak with Fernando about Ciudad del Este, the country's industrial and commercial development, the real estate market, and what he is seeing from his position.

If you’re interested in their perspectives, you can go ahead and ask them things like: 

How are they interpreting the political situation?

Do they believe foreign investors will reconsider their commitments?

What do they expect from the new administration?

Will growth slow?

What is the sentiment on the ground, and how is it evolving?

How are their networks of other on-the-ground operators, developers and market insiders adapting to the situation? 

How do they see the country's investment environment evolving over the next five to ten years?

I trust those of you who understand that Paraguay’s future has yet to be written, and I don't believe it has been fully priced in either.

Write Markus at: [email protected] 

Or, for Fernando, send an email to: [email protected] 

Speak soon,
Mikkel

PS. I literally just received the first $19,000 USD back from Ueno. I still have more than six times that amount outstanding, but this is a move in the right direction. I’ll keep you updated on any developments worth understanding.