Ueno Collapse Locks Out Millions as Elite Face Probe

Ueno Bank’s collapse froze the accounts of nearly 3 million customers, leaving more than half of Paraguay’s population unable to access bank accounts as workers, retirees and depositors sought savings and unpaid wages. The Senate resumed impeachment proceedings against President Santiago Pena on Friday, Nov. 6, while the people caught in the financial wreckage waited for their money.

Luis Pineda, marching to Congress on Wednesday, said: “Santiago Pena and the Colorado Party have stolen all our savings.” Demonstrators in Asuncion protested on Nov. 5, blaming Pena personally because of his ties to the failed bank.

Who Pays for the Collapse

Customers couldn’t withdraw cash, make digital payments or use bank cards. The central bank intervened earlier in the week after Ueno’s solvency ratio fell to less than half the legal requirement, then placed the bank into resolution. That process allows regulators to transfer deposits to other institutions before liquidating remaining assets; for customers, the immediate fact was frozen access to their accounts.

Ueno reported holding $850 million in public funds in one account of the crisis. Another account of its holdings said it managed $800 million, including about $380 million invested by Paraguay’s state pension and health fund, according to Central Bank of Paraguay data. Protesters objected to public pension money being invested in the bank despite warnings about high-risk insider lending.

Regulators found risky lending to “insiders,” ABC Color reported. Ueno loaned $146 million to companies tied to its owner, Grupo Vazquez, which has links to Pena. Investigators found that the loans exceeded legal limits and lacked sufficient collateral. Central Bank regulators said loans to companies linked to the bank’s owners were poorly documented, and some expenses had been wrongly counted as assets. After the books were corrected, Ueno’s capital stood at less than half the legal minimum.

Pena held a stake in Grupo Vazquez, Ueno’s parent company, until March 2025; he says he sold his shares last year. He denies improper ties to Ueno. After taking office in 2023, he appointed Carlos Carvallo, the former head of Ueno’s predecessor company, to lead the central bank. Carvallo resigned as central bank chief during the crisis.

Impeachment and the Clock

Lawmakers filed impeachment charges on Thursday despite Pena’s announced resignation, and the lower house of Congress approved them in a 78-0 vote. Pena requested a 72-hour extension to prepare his defence, saying he’d been given less than 12 hours to answer “an accusatory writ and about 300 pages of attachments.” “That is not due process,” he said. The Senate held a rare session and chose to continue efforts to remove him from office.

Opposition politicians want Pena formally removed rather than allowed to resign, arguing resignation would preserve his eligibility for a lifetime Senate seat and shield him from possible prosecution. If convicted in an impeachment trial, he would lose that seat and the associated legal protections ordinarily granted to former Paraguayan presidents. Pena has sought congressional approval of his resignation.

Promises, Investigations and Repayment

A state-guaranteed fund created under a law rushed through Congress on Wednesday is to begin repaying depositors on Thursday, starting with small accounts holding up to $1,600. Repayments are to be made within five business days. The fund insures up to about $36,000 per customer, which the central bank says will cover the full balances of an estimated 97 percent of customers.

Paraguay’s attorney general, Emiliano Rolon Fernandez, ordered three criminal investigations, including allegations involving Pena and current and former government officials. The inquiries will examine regulatory oversight, the handling of Ueno’s failure and the placement of public funds in the lender. A judge ordered six Ueno executives, including founder Miguel Vazquez and bank President Juan Manuel Gustale, detained pending trial; two others were placed under house arrest. Prosecutors charged 27 bank officials and associates with breach of trust and attempted fraud.

In a Thursday video address, Pena apologised for failing to prevent the crisis. “My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfil its purpose, and that public funds — as well as the resources that belong to all Paraguayans — be protected.” The promise now sits beside the frozen accounts, public money exposed to risky lending, and an impeachment fight over who answers for the wreckage.