The sudden seizure of Ueno Bank by Paraguay’s central bank set off a chain reaction that immobilised more than half of the nation’s population. By Tuesday and Wednesday, lengthy queues snaked through the streets of Asunción as three million depositors tried in vain to withdraw cash, wages and pensions. The digital lender, once celebrated for its rapid expansion, now faced a capital shortfall that forced authorities to lock its doors and suspend its app, cards and transfer services.
Public outrage and street protests
As the news spread, thousands of citizens flooded the capital on Thursday, demanding the return of their savings. Demonstrators clashed with police units that responded with tear-gas canisters and water cannons. The unrest was not limited to Asunción; similar gatherings erupted in other towns, reflecting a nationwide sense of betrayal. Protesters repeatedly called for the removal of President Santiago Peña, accusing him of diverting pension funds and shielding the bank from regulatory scrutiny.
Impeachment proceedings and house arrest
Amid the turmoil, Peña offered to resign on Thursday, hoping to ease social tensions. Lawmakers, however, rejected the resignation and moved straight to an impeachment vote. On Friday, the lower house voted unanimously—44 of 45 senators in favour, with one member absent—to strip the president of his immunity and charge him with misconduct. The accusations included conflicts of interest, manipulation of oversight agencies, diversion of public pension money and participation in a cover-up involving the central bank.
Following the vote, Peña was taken into house arrest within minutes. Prosecutor Silvia Margarita Gonzalez Vester announced that the former head of state will be interrogated on Saturday on allegations of breach of trust, influence peddling and misappropriation of funds. Senate president Basilio Núñez described the outcome as a finding of “dereliction of duty” and underscored the historic nature of a president being removed by his own party.
Transition of power and government promises
Deputy president Pedro Alliana was sworn in as interim president on Friday, pledging not to abandon the millions affected by the scandal. “Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated,” Alliana asserted, emphasizing that his mandate will last until 2028. The interim administration has already begun coordinating with other financial institutions to transfer roughly 280,000 Ueno customers to viable banks, while the central bank reassures the public that the broader banking system remains sound.
Authorities have detained eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale, and have charged 27 additional officials and business partners with offenses ranging from breach of trust to attempted fraud. Lawyers representing the detained individuals requested more time to review the accusations.
While the immediate crisis is being managed, the episode has exposed deeper structural issues in Paraguay’s regulatory framework. Critics point to the close ties between President Peña, the ruling Colorado Party and the central bank, which appointed Carlos Carvallo—previously head of Financiera Ueno—to oversee the very institution later seized. The scandal has reignited debates over transparency, oversight and the role of political patronage in the country’s financial sector.
