By Fatma Younis
Paraguay President Santiago Peña resigned Thursday after the collapse of Ueno Bank, a major digital lender that held deposits for more than 60% of the country's adults, triggered a political crisis and mass protests in the capital, Asunción.
Central Bank Seizes Lender Amid Solvency Crisis
Paraguay's central bank seized Ueno Bank on Tuesday after regulators found poorly documented lending to companies tied to the bank's owners and expenses wrongly counted as assets. The corrections pushed Ueno's capital below half the legal minimum. The bank's app, cards, and transfers went dark, branches locked their doors, and desperate depositors lined up outside with no access to savings.
Political Fallout and Impeachment Threat
Hours after the seizure, Peña faced impeachment as protesters clashed with riot police. By Thursday, both main factions of his conservative Colorado Party pledged to back impeachment after former President Horacio Cartes, the party's powerful leader, withdrew support. Impeachment requires a two-thirds majority in the lower house to send the case to the Senate, where another two-thirds vote would remove Peña, a 47-year-old former International Monetary Fund economist.
Ueno's Rapid Growth and Ties to Peña
Ueno, rebranded from a decades-old finance company after winning a banking license in 2023, grew to over 70 locations, sponsored Paraguay's national soccer team, and plastered its name on the main stadium. Government money poured into Ueno under Peña, who until last year held a stake in the bank's holding company. He also appointed Carlos Carvallo, president of Financiera Ueno, to run the central bank — the agency charged with supervising the lender.
Warnings Ignored Before Collapse
Central bank inspectors in June found a pattern of risky lending to insiders, with large sums extended to owner-linked companies beyond legal limits and without sufficient collateral. On a single day in September 2025, nearly $39 million went to three such companies. Peña repeatedly dismissed the warnings as a smear campaign. As of last month, Ueno held roughly $800 million in public deposits, about a quarter of its total, including funds from the state pension and health fund and hydroelectric dam operators.
Executives Detained, Protests Erupt
Authorities have detained eight senior Ueno executives, including founder Miguel Vázquez and bank President Juan Manuel Gustale. Prosecutors charged 27 bank officials and business associates with breach of trust and attempted fraud. Hundreds of retirees, depositors, students, and workers flooded Asunción's streets Wednesday, demanding Peña's impeachment and chanting "We want your head, Peña!" Riot police fired pepper spray and rubber pellets. Hundreds of Ueno employees protested Thursday at the Labor Ministry for severance and unpaid wages.
Corruption Concerns Fuel Public Anger
Many Paraguayans see the collapse as a case study in official corruption. Only Venezuela ranks worse in South America on Transparency International's perceived corruption index. At the national stadium, Ueno's logo was scrubbed away, while fresh graffiti across the capital denounced politicians as thieves.
