Paraguay is experiencing one of the most severe political and financial crises in recent years, with President Santiago Peña at the center of a banking scandal that threatens to prematurely end his term. The collapse of Ueno Bank, one of the country's main digital institutions, has led to the freezing of the accounts of about three million customers, sparking public protests and a fierce institutional clash. On Thursday, November 5, Peña announced his resignation through a video posted on social media, but Congress decided to reject it, opting instead to proceed with impeachment. The House of Representatives voted unanimously in favor of the procedure, while the Senate is tasked with evaluating the charges and deciding whether to remove the head of state.
The incident originated on Tuesday, November 3, when the Central Bank of Paraguay ordered an extraordinary intervention against Ueno Bank, an institution founded in 2021 that quickly became a reference point for millions of citizens. Checks conducted by supervisory authorities reportedly revealed an extremely compromised financial situation, with a solvency ratio less than half the minimum required by law. Faced with the risk of financial collapse, the Central Bank initiated a resolution procedure, temporarily suspending account operations and preventing customers from making withdrawals, transfers, and other transactions. This decision had immediate consequences for a significant portion of the population, considering the bank claimed to have about three million customers, equivalent to 60% of Paraguayan adults.
Investigations into the collapse have uncovered a complex network of relationships between the financial and political worlds. Ueno Bank belongs to the Grupo Vázquez, a business conglomerate in which Santiago Peña himself allegedly held a shareholding until March 2025. At the center of the investigations are large loans granted to companies linked to the group's shareholders, operations on which investigators suspect irregularities and a lack of transparency in resource management. Authorities have ordered the arrest of eight people, including the bank's president and CEO. Peña is also involved in the criminal investigation, although he has not yet been summoned to be heard by the magistrates. Individual responsibilities remain to be determined, and investigative hypotheses do not constitute proof of guilt.
Complicating the situation further is the position of Carlos Carvallo, governor of the Paraguayan Central Bank and former president of Ueno Bank. Carvallo led the institution between 2021 and 2023 before being appointed to head the monetary authority by Peña. As the scandal worsened, the president attempted to distance himself from the affair by requesting the governor's resignation, which he agreed to but announced his intention to remain temporarily in office to complete the bank resolution procedure. The operation involves transferring sustainable activities to other institutions and liquidating the remaining components in an attempt to contain losses and protect the national financial system.
Meanwhile, the anger of savers has spilled into the streets of Asunción and in front of the bank's branches, which remained closed after the authorities' intervention. Numerous citizens have demanded explanations about the fate of their money, while other demonstrations have taken place near Parliament, where the impeachment debate has further fueled tension. The crisis has taken on particularly worrying proportions due to the exposure of public entities. According to data released by Ueno Bank in previous months, the institution managed over 700 million euros of public resources, including sums intended for the pension and healthcare systems. Among these were about 338 million euros invested by the state pension fund, a circumstance that has raised questions about the safety of public investments and the controls exercised by the competent authorities.
To reassure the population, the Central Bank has announced that in the coming days, guaranteed deposit refunds will be initiated, up to a maximum of 228.3 million guaraníes per customer, equivalent to about 34,000 euros. According to preliminary estimates, this coverage should allow 97% of account holders to fully recover their savings. However, the situation remains uncertain for those with amounts exceeding the specified threshold, as there are currently no guarantees of complete restitution. The national pension fund has also assured that pension payments will continue to be made regularly, announcing the transfer of accounts used by about 32,000 pensioners to another institution. The same entity has communicated its intention to undertake legal actions to recover the resources invested in the bank.
On the political front, the scandal has severely damaged the image of Santiago Peña, a conservative member of the Colorado Party and former economist at the International Monetary Fund. The president, considered an ally of the U.S. administration of Donald Trump, had built his credibility on economic expertise and the promise of ensuring financial stability in Paraguay. However, the collapse of a bank with which he had corporate ties has caused a rift within the majority, calling into question the support he enjoyed until a few days ago. The Colorado Party, a near-continuous protagonist of national political life since 1947, thus faces a crisis that directly involves the state's leadership.
The Congress's decision to reject Peña's resignation has added complexity to the situation. In the Paraguayan system, former presidents can obtain the status of lifetime senators, accompanied by particular institutional prerogatives. The possibility that a voluntary exit from office could allow the president to benefit from such protections has fueled political confrontation, prompting Parliament to favor the path of impeachment. Peña therefore remains formally in office and will have to face the procedure before the Senate, which is called to rule on his possible removal.
(Associated Medias) - All rights reserved