The collapse of Ueno Bank, a major digital bank in Paraguay, has led to a significant financial crisis and political turmoil in the country. The bank's operations were suspended after regulators discovered that its solvency ratio had dropped below half the legally required minimum. This has left millions of customers, approximately three million, unable to access their accounts. The bank's financial weaknesses were uncovered following an investigation by the Central Bank of Paraguay.
Ueno Bank held hundreds of millions of dollars in public funds, including approximately $380m belonging to the country’s Social Security Institute. This has raised concerns about the safety of pension investments and the potential impact on the country's social security system. The bank's collapse has also sparked concerns about the protection of public funds in Paraguay and the need for effective financial regulation.
The crisis has taken a political dimension due to President Santiago Peña’s previous business connections with Grupo Vázquez, the conglomerate that controls Ueno Bank. Opposition lawmakers have accused Peña of conflicts of interest, regulatory failures, and mishandling of public funds. They have also initiated impeachment proceedings against Peña and Vice-President Pedro Alliana.
Thirty-five lawmakers signed impeachment articles against Peña and requested an extraordinary congressional session to consider the allegations. However, the opposition needs at least 53 votes in the 80-member lower house to advance the impeachment proceedings. The crisis has also led to the resignation of Central Bank President Carlos Carvallo, who faced criticism over his previous association with Ueno.
Protests have erupted in the capital, Asunción, as angry customers demand access to their savings. Demonstrators have also called for the removal of the country’s political leadership. The authorities have launched investigations into suspected financial misconduct, with eight Ueno executives detained as part of the probe.
The government has promised to protect depositors, while the central bank has outlined arrangements for reimbursing eligible customers. Under the country’s deposit protection scheme, eligible deposits are guaranteed up to approximately $38,000 per customer. President Peña has called for accountability, insisting that those responsible for any irregularities must face justice.
Despite the growing public anger, the central bank has maintained that Ueno’s financial difficulties do not indicate a wider banking crisis, insisting that the country’s broader financial system remains operational. The collapse has raised serious questions about financial regulation, political connections, and the protection of public funds in Paraguay.
Key points
- Opposition lawmakers seek to impeach President Santiago Peña and Vice-President Pedro Alliana over Ueno Bank's collapse.
- Ueno Bank's collapse affects approximately three million customers and $380m in public funds.
- The crisis raises concerns about financial regulation and the protection of public funds in Paraguay.
