Prosecutor seeks charges against Paraguay's president Santiago Peña following bank collapse
Paraguayan President Santiago Peña resigned hours after the country's central bank seized Ueno Bank, which claimed more than 60 per cent of the country's adults as customers.
President had downplayed fears in recent weeks after worrying reports about Ueno's stability
The Associated Press
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Paraguayan President Santiago Peña resigned hours after the country's central bank seized Ueno Bank, which claimed more than 60 per cent of the country's adults as customers.
Peña, who was facing an impeachment proceeding in the bank collapse that has seen demonstrators clash with riot police, said he made his decision for "the stability of our country, social peace and the need to preserve our democratic institutions."
Resigning just over three years into a five-year term, Peña offered an apology but stopped short of accepting responsibility for the banking crisis.
"It was never my intention to betray the trust they placed in me," he said, adding his priority was ensuring depositors recovered their savings.
Hundreds of employees of Ueno Bank and other companies belonging to Grupo Vázquez, the bank's parent conglomerate, protested outside Paraguay's Labour Ministry on Thursday, demanding severance and unpaid wages, with their jobs in limbo and their salaries trapped at the failed bank.
People queue outside a branch of the Banco Familiar in Asunción on Wednesday, hoping to withdraw savings that originally were held at Ueno. (Daniel Duarte/AFP/Getty Images)
A day earlier, hundreds of retirees, depositors, university students and workers flooded the streets of Asunción, the capital.
"We want your head, Peña!" they shouted. Their signs demanded Peña's impeachment, called him "the enemy of savers" and pleaded, "Give us back our money." Riot police fired pepper spray and rubber pellets to push back the crowds.
By Thursday morning, a rebellion by several members of Peña's own conservative Colorado Party had become a party-wide revolt. Both of the ruling party's main factions in the lower house had pledged to back impeachment, and former president Horacio Cartes, Colorado's powerful leader, withdrew his support for Peña.
Peña, a 47-year-old former International Monetary Fund economist, had approved emergency payouts to depositors on Wednesday and named a new central bank chief.
Bank linked to president, allies
The political upheaval and promises of relief leave a bigger question unanswered: how a bank linked to the president, who until last year had a stake in Ueno's holding company, could grow so rapidly in size and importance despite repeated warnings about its dubious lending practices.
Soon after winning its banking licence in 2023, Ueno seemed to be everywhere in Paraguay. The digital lender — a rebranded version of a decades-old finance company — lured customers with generous cash-back offers on groceries, grew to more than 70 locations, sponsored Paraguay's national soccer team and plastered its name on the country's main stadium.
Ueno Bank depositors clash with police on Tuesday night in Asunción. (Daniel Duarte/AFP/Getty Images)
Government money poured into Ueno's coffers under Peña. He also appointed Carlos Carvallo, president of Financiera Ueno, the predecessor to Ueno Bank, to run the central bank — the agency charged with supervising the digital lender.
As of last month, Ueno reported holding roughly $800 million US in public deposits, about a quarter of its total, including money from the state pension and health fund, and the operators of Paraguay's giant hydroelectric dams.
Even as retirees' savings and other public money piled up at Ueno, worries were escalating inside the central bank. In June, its inspectors found a pattern of risky lending to insiders, reported ABC Color, a leading Paraguayan newspaper.
Ueno had extended large sums to companies tied to its owners, beyond what the law allows and without enough collateral to cover the debts if they went bad. On a single day in September 2025, nearly $39 million had gone to three such companies.
Peña repeatedly brushed off the warnings. As recently as last month, he defended Ueno and the central bank's oversight, dismissing the concerns as a smear campaign that was spooking the public.
Bank executives arrested
But on Monday, it all came crashing down. Regulators investigating Ueno's loans to companies linked to its owners found poorly documented lending, the central bank said, as well as expenses the bank had wrongly counted as assets.
Once the books were corrected, Ueno's capital, the cushion banks must keep to absorb losses, fell to less than half the legal minimum. The central bank seized the lender on Tuesday and announced plans to move customers' accounts, along with whatever assets that still hold value, to other banks, before liquidating what's left.
Ueno's app, cards and transfers went dark and its branches locked their doors, leaving desperate depositors lined up outside with no way to cash out their savings. On Wednesday, a rush to open new accounts elsewhere crashed other banks' mobile apps, fuelling public panic.
"This is yet another assault on honest, hard-working citizens, people whose small savings are the fruit of years of labour," said protester Belarmino Balbuena.
Executives of Ueno Bank, taken over by Paraguay's central bank amid a solvency crisis, are taken into custody Wednesday at the anti-corruption prosecutor's office in Asunción. (Jorge Saenz/The Associated Press)
Officials appealed for calm and said they had begun repaying depositors, opening new accounts elsewhere for about 280,000 customers who had banked only with Ueno.
Authorities have detained eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale. Prosecutors also charged 27 bank officials and business associates with offences that include breach of trust and attempted fraud. Lawyers for several of the detained said they needed time to review the allegations before they could comment.
At the national stadium that once bore Ueno's name, the bank's logo had already been scrubbed away. But across the capital, fresh graffiti denounced politicians as thieves.
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