Paraguay Digital Bank Ueno Collapses, Threatening President Peña with Impeachment
Paraguay's digital lender Ueno Bank collapsed, freezing accounts for three million customers, prompting the central bank governor's resignation, eight executive detentions, and an impeachment push against President Santiago Peña.
Nearly three million customers of Paraguay's digital lender Ueno Bank have lost access to their accounts after the central bank intervened and suspended its license amid a severe solvency crisis. The collapse has already prompted the resignation of Central Bank Governor Carlos Carvallo and the detention of eight top executives, while triggering an impeachment push against President Santiago Peña.
According to Reuters, Ueno managed nearly 850 million dollars in public funds, including about 380 million dollars from the IPS state pension fund. Peña held shares in Grupo Vázquez, the conglomerate controlling the bank, until March 2025. Carvallo previously headed the financial body from which Ueno emerged until August 2023, before being appointed by Peña. While the central bank stated that Carvallo recused himself from Ueno-related decisions, critics have pointed to a structural conflict of interest.
Impeachment Push and Protests
A total of 35 lawmakers in the lower house submitted documents to advance impeachment proceedings against Peña, accusing him of conflicts of interest, misuse of pension funds, and institutional cover-up. The opposition allegations have not yet been adjudicated in a legal process. Protests erupted in Asunción, where police deployed pepper spray and rubber bullets near the Pantheon of Heroes, while demonstrators gathered outside the presidential residence.
President Peña has not publicly addressed the impeachment push, but on Wednesday he urged political leaders to prioritize depositors and vowed that those responsible for irregularities will face justice. S&P downgraded Ueno to default status, noting it is Paraguay's sixth-largest bank and accounts for eight percent of system credit.
Deposit Guarantees and Market Fallout
The central bank announced that the Deposit Guarantee Fund covers up to 228.3 million guaraníes per depositor, roughly 37,000 dollars, which is estimated to fully cover about 97 percent of depositors. Advance payments are set to begin within 24 hours. Meanwhile, the crisis has sparked panic withdrawals and long queues at other financial institutions across the country.
