Paraguayan President Impeached After Ueno Bank Collapse Freezes Millions of Accounts

Around 3 million Paraguayans, roughly 60 % of the adult population, found their bank accounts frozen after the central bank placed Ueno Bank into resolution on insolvency grounds. The digital lender, which had rapidly expanded and become the primary banking option for many, was ordered to cease operations on Monday night.

The fallout triggered a political crisis that culminated in the impeachment and house arrest of President Santiago Peña. Peña, who had resigned a day earlier in an attempt to retain the constitutional privilege of a lifetime senate seat, was stripped of that status by lawmakers and will now face criminal proceedings in ordinary courts.

Investigators are probing Peña for alleged favoritism toward Ueno. During his tenure, Peña held roughly $1 million in shares of the bank’s parent company, which he sold in April 2025. Critics say the government relaxed regulations that allowed public and pension funds—estimated at $800 million to $860 million—to be invested in Ueno.

The bank’s collapse has had a broad economic impact. Businesses reported sales drops of up to 80 % this week, and media outlets linked to the bank were suspended, affecting 300 workers whose salaries were halted. About 32 000 pensioners lost regular payments after their public pension funds were invested in the bank.

Authorities have arrested eight senior Ueno executives and the former central bank chief, Carlos Carvallo Spalding, on suspicion of concealing the bank’s deteriorating condition. The public prosecutor’s office is also investigating Peña on charges of illicit enrichment, money laundering and influence peddling, which he denies.

A guarantee fund covers deposits up to $38 000, protecting more than 90 % of individual account holders. The central bank began limited payouts on Friday for customers meeting specific criteria, but many, such as 25-year-old chef Paola Benítez, have yet to receive their savings.