By Ahmed Abdelsalam
Paraguay's central bank seized Ueno Bank on Tuesday after discovering poorly documented loans to companies linked to the bank's owners, leaving the digital lender's capital at less than half the legal minimum. The collapse has trapped the savings of hundreds of thousands of depositors and triggered a political crisis that now threatens President Santiago Peña with impeachment.
Central Bank Seizes Ueno Bank
Regulators found that Ueno had extended large sums to insider companies beyond legal limits and without sufficient collateral. Once the books were corrected, the bank's capital buffer fell sharply, prompting the central bank to take control, freeze the bank's app, cards and transfers, and lock branch doors. Depositors were left unable to access their funds, sparking panic and long lines outside branches.
Political Fallout and Impeachment Push
By Thursday, members of Peña's own Colorado Party had revolted, with both main factions in the lower house pledging to back impeachment. Former President Horacio Cartes, the party's powerful leader, withdrew his support for Peña. Impeachment requires a two-thirds majority in the lower house and then a two-thirds vote in the Senate to remove the president, a 47-year-old former IMF economist.
Rapid Growth and Regulatory Warnings
Ueno grew from an obscure finance company to a household name in under five years, claiming more than 60% of Paraguay's adults as customers. It held roughly $800 million in public deposits, including funds from the state pension and health fund and hydroelectric dam operators. Central bank inspectors flagged risky insider lending as early as June, but Peña repeatedly dismissed the warnings as a smear campaign.
Depositors Left Stranded
After the seizure, officials began emergency payouts and opened new accounts at other banks for about 280,000 customers who had banked exclusively with Ueno. Interim central bank president Pedro Acosta Bernal insisted the banking system remains sound. Authorities have detained eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale, and charged 27 officials and associates with breach of trust and attempted fraud.
Protests and Corruption Allegations
Hundreds of retirees, depositors, students and workers marched in Asunción demanding Peña's impeachment and the return of their savings. Riot police used pepper spray and rubber pellets to disperse crowds. Protesters linked the collapse to systemic corruption, noting Paraguay ranks second-worst in South America on Transparency International's corruption index. Graffiti across the capital denounced politicians as thieves.
