Three Million Hit By Ueno Bank Collapse As Paraguay President Faces Impeachment

Paraguayan President Santiago Peña has offered to resign after the failure of digital lender Ueno Bank left nearly three million customers unable to access their accounts, triggering protests, criminal investigations and an impeachment bid against him. However, Congress did not accept his resignation. A joint session convened to consider the offer failed to reach a quorum, while the Senate began an impeachment trial that could remove him from office.

The banking crisis has exposed the close connections between Ueno, the government and public institutions that deposited hundreds of millions of dollars with the lender. It has also raised questions about regulatory oversight, Peña's previous business ties to the bank's owner and the handling of public pension funds. While authorities have begun arrangements to return depositors' money, the president is facing a criminal investigation alongside bank executives accused of financial irregularities.

Peña Offers To Resign As Banking Crisis Triggers Political Turmoil

In a video statement posted on X on Thursday, November 5, Peña announced his decision to step down, citing the need to protect Paraguay's stability and democratic institutions.

"I have made the decision to submit my resignation as president of the republic. I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions," he said.

The lower house voted unanimously to impeach Peña shortly after his announcement. Although Congress did not accept his resignation, a joint session to consider it failed for lack of quorum. The Senate subsequently began impeachment proceedings, which could result in his removal from office. Peña has said he will cooperate with investigators and defend himself against the allegations.

The political pressure intensified after former president Horacio Cartes, the head of the ruling Colorado Party and Peña's former ally, publicly backed impeachment.

"We will not stand on the side of the theft of public, private and pensioners' funds," Cartes said, according to The Guardian.

Vice-President Pedro Alliana would succeed Peña if he left office. Resignation could also have allowed Peña to retain a lifetime Senate seat and the parliamentary immunity attached to it.

Ueno Bank Crisis Leaves Millions Without Access To Savings

The Central Bank of Paraguay initiated resolution proceedings against the lender on November 3 after finding that its solvency ratio had fallen below half the legally required minimum. The regulator attributed the shortfall to adjustments made to the bank's financial statements during the process of addressing its financial difficulties.

AP reported that Central Bank inspectors found poorly documented loans and expenses that had been incorrectly recorded as assets. Earlier inspections had also identified risky lending to companies linked to the bank's owners, including loans that exceeded legal limits and lacked sufficient collateral, as reported by Paraguayan newspaper ABC Color.

Following the intervention, Ueno's mobile application, cards and transfer services stopped working, while its branches closed. Customers were unable to access their savings, and a rush to open accounts elsewhere caused disruptions to other banks' mobile applications.

The statutory deposit guarantee covers up to 75 monthly minimum wages, equivalent to 228.3 million guaraníes per depositor, per financial institution. The Central Bank estimates that this will cover the full balances of around 97 per cent of Ueno's customers.

Congress separately authorised an advance payment of up to 40 minimum wages, or 121.76 million guaraníes, after deducting overdue debts to Ueno. The payment process is to be completed within five working days. Separately, the Central Bank began the first phase of guarantee payments for customers with deposits of up to 10 million guaraníes, no outstanding debts and an account at another financial institution.

Peña's Links To Ueno And Public Funds Under Scrutiny

The president previously held a stake in Grupo Vázquez, the business group that controls Ueno. He has said he sold his shares in March 2025 and denied having any improper role in the bank's affairs. Ueno has also maintained that Peña was never a direct shareholder or investor in the bank.

Reuters reported that Ueno administered approximately US$850 million in public funds, including money belonging to state institutions and pension-related bodies. AP separately reported that the bank held around US$800 million in public deposits as of October, approximately a quarter of its total deposits.

One of the largest exposures was that of Paraguay's Social Security Institute (IPS), which manages pension and healthcare funds for workers. Its financial manager, Gladys Vera, told ABC Color that the institution had approximately US$355 million deposited with Ueno, representing around 9 per cent of its investment portfolio.

Central bank chief Carlos Carvallo, who previously headed Ueno's predecessor Financiera Ueno, resigned on November 3 at Peña's request. The regulator said he had recused himself from decisions involving the bank.

The controversy has now extended to Peña himself. On November 5, Attorney General Emiliano Rolón Fernández opened three criminal investigations into the supervision and resolution of Ueno, the placement of public funds in the bank and the conduct of current and former government officials. The prosecutor's office said a complaint against Peña, originally filed in October 2025, had been expanded to include allegations linked to the bank's oversight and resolution. He has said he will cooperate with investigators.

Protests, Arrests And Questions Over Paraguay's Financial System

The crisis has triggered demonstrations in the capital, Asunción, with depositors, pensioners, students and workers demanding access to their money and accountability from the government.

"Santiago Peña and the Colorado Party have stolen all our savings," protester Luis Pineda told AP. "We are fed up with 70 years of plunder," he added.

Riot police used pepper spray and rubber pellets to disperse demonstrators outside Congress. Hundreds of employees of Ueno and other companies belonging to Grupo Vázquez also protested outside the Labour Ministry, demanding unpaid wages and severance payments. The Labour Ministry estimated that around 7,000 direct and indirect jobs had been affected.

The Public Prosecutor's Office charged 27 people linked to Ueno Bank and related companies with alleged offences including breach of trust, attempted fraud, improper conduct during a crisis and failure to maintain proper commercial books. Its investigation covers loans and overdrafts granted between 2025 and 2026 to companies linked to the bank. Prosecutors allege that some loans lacked sufficient collateral and that funds were transferred to other companies within the same business group.

A judge ordered six executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale, into preventive detention, while two others were placed under house arrest.

Gustale's lawyer, José Fernández Zacur, disputed the allegations, telling local media: "The president or board is not responsible for deciding who receives a particular loan."