Collapse of Ueno Bank in Paraguay leads President Santiago Peña to resign

Paraguayan President Santiago Peña has decided to resign after the collapse of Ueno Bank, a lender that grew rapidly over three years to nearly three million customers. The Central Bank of Paraguay (BCP) announced on the morning of 3 November that it was taking over the bank and starting liquidation, after its solvency ratio was found to have fallen below 50%. In a country of just over six million people, the failure has set off a serious political crisis.

What happened to the bank

At around 03:24 the bank's app stopped showing account balances and displayed a message saying the balance could not be shown. BCP board member Liana Caballero confirmed that the institution had been closed and that no service, including the app and cards, was working. The Superintendency of Banks found that the bank could not meet a legal reserve requirement of 70 million dollars set by the central bank, even though it had advertised a 100 million dollar capitalisation plan only days earlier.

The bank held about 850 million dollars in public funds, including money from the Social Security Institute, which underpins workers' pensions and healthcare. Authorities pointed out that a guarantee fund reimburses each client up to 75 minimum wages, roughly 37,700 dollars, but trust had already collapsed. Angry crowds gathered outside the headquarters in Asunción and the 75 branches.

Political fallout

The opposition also blames the central bank's leadership. At the request of 35 lawmakers, the Chamber of Deputies had planned an extraordinary session to vote on opening impeachment proceedings against Peña. The charges cited conflict of interest, alleged embezzlement of pension funds and institutional protection of the central bank. On Wednesday evening the president announced the departure of the central bank's head and called on the courts to establish responsibility, before deciding to resign.

On Wednesday, eight senior executives were arrested, including chief executive Miguel Vázquez. The Association of Importers and Traders warned of a 35% drop in sales at major retailers. Ueno Bank is owned by the influential Grupo Vázquez and sponsored the football clubs Cerro Porteño and Olimpia as well as the Defensores del Chaco stadium. Peña, an economist and former International Monetary Fund official, came to power in 2023.