Paraguay's central bank took control of Ueno Bank.
Nearly three million customers lost access to accounts.
Opposition lawmakers filed impeachment articles against President Peña.
For nearly three million people in Paraguay, a routine visit to a banking app has turned into a struggle to access their own money. Savings, salaries and pension payments have suddenly become difficult to access after the country's central bank took control of Ueno Bank, one of its biggest digital lenders.
Angry customers have taken to the streets, demanding answers and the return of their money. But the bank's collapse has opened a much bigger crisis, raising questions about financial regulation, public funds and the political connections of President Santiago Peña, who is now facing an impeachment challenge.
What Is The Case?
Protests have erupted across Paraguay after the central bank took control of Ueno Bank, leaving nearly three million customers unable to access their savings, salaries and pension payments.
Hundreds of worried depositors gathered outside shuttered bank branches in the capital, Asunción, demanding the immediate return of their money. Ueno serves about three million customers in a country with a population of 6.5 million and oversees nearly $850 million in government funds
Some demonstrations turned tense, with clashes between protesters and police. Customers fear they could lose their life savings despite government assurances that insured deposits will be returned.
The crisis has also triggered a political storm, with opposition lawmakers seeking the impeachment of President Santiago Peña over his links to the bank's owners and questions surrounding the handling of public funds. Authorities have ordered the arrest of eight bank executives as investigations continue.
Why Central Bank Took Over?
Paraguay’s central bank stepped in after Ueno Bank’s financial health worsened to a level that fell well below the legal requirements. It has tried to reassure customers and investors that the crisis is limited to Ueno and does not point to wider problems in the country’s banking sector.
Ueno Bank will no longer be allowed to manage its own operations after Paraguay’s central bank stepped in on Monday. The regulator’s board approved the decision unanimously, placing the lender under the control of officials who will examine its financial position and safeguard its assets.
The intervention followed a sharp fall in the bank’s solvency ratio, which dropped to less than half the minimum level required by law. Under this process, regulators can shift customers’ deposits to other banks and sell the failed lender’s remaining assets.
Officials have also said that around 97% of the bank’s depositors have savings covered by the government-backed deposit protection scheme, Bloomberg reported.
What Will Happen To People’s Money?
Paraguay's deposit guarantee fund protects savings of up to 228.3 million guaraníes ($38,000) per depositor. Preliminary estimates suggest this would cover the full deposits of around 97% of Ueno's customers. The law requires the guaranteed amount to be paid within 15 days of the bank's takeover, although authorities can extend the period once.
The central bank has also announced an initial payment of up to 10 million guaraníes ($1,700) for each depositor. Any outstanding loans or other debts owed to Ueno will be deducted from the payment. However, the regulator has yet to announce when the money will be transferred.
Depositors with savings above the guaranteed limit could face losses, as the central bank has not assured them that they will get their money back in full. The regulator has said it will work to protect their funds as much as possible.
Meanwhile, the state pension fund has assured retirees that their payments will continue without interruption. It is shifting around 32,000 pensioners who receive their payments through Ueno to another bank. The fund also plans to take legal action to recover the money it had invested in the lender, according to AP.
Why Impeachment Against President Peña
The opposition’s push to impeach President Santiago Peña comes partly from his past ties to Grupo Vazquez, the business group that owns Ueno Bank. Peña, a conservative economist who became president in 2023, retained shares in the group until March 2025.
Questions have also been raised over Peña’s choice of Carlos Carvallo to lead Paraguay’s central bank. Carvallo took charge of the regulator soon after Peña became president, despite having previously headed Financiera Ueno, the company that later became Ueno Bank.
His past association with the lender put his appointment under scrutiny. Critics questioned whether he could act independently as the bank’s regulator while having previously been involved with the same financial institution.
The allegations have now reached Congress. On Wednesday (November 4), 35 lawmakers in the 80-member lower house filed impeachment articles against Peña. They accused his government of misconduct, conflicts of interest and irregularities in its handling of the bank’s collapse. The opposition has also called for a special session on Thursday to discuss the motion.
However, getting the impeachment process started will not be easy. The opposition needs 53 votes in the lower house, followed by support from at least 30 of the 45 senators. Peña’s Colorado Party controls a majority in both chambers, leaving the motion’s chances uncertain.
A Bank Under Scrutiny Even Before Its Collapse
Paraguay has been trying to attract foreign investors with low taxes, limited regulation and a record of economic stability. The country recently secured its first investment-grade credit ratings, a milestone in President Santiago Peña's efforts to turn it into a manufacturing hub. However, Ueno Bank's collapse has brought fresh attention to concerns about corruption and weak institutions. Paraguay ranked 150th among 182 countries in Transparency International's 2025 Corruption Perceptions Index.
Peña also had business ties to Grupo Vázquez, Ueno's parent company, until March 2025. Meanwhile, government agencies and state funds deposited large sums with the bank, which said public money made up around a quarter of its deposits.
The central bank had warned Ueno in June about excessive lending to businesses linked to its owners. Such loans can allow bank owners to channel depositors' money into their own companies, creating serious financial risks.
