Paraguay bank collapse fells a presidency and leaves millions broke

Ueno Bank’s insolvency triggered a national crisis after the central bank placed the fast-growing digital lender into resolution, freezing accounts belonging to nearly three million Paraguayans - about 60% of adults. Customers had been drawn by easy mobile banking and unusually high returns, while the bank’s reach extended through its sponsorship of football and ownership links to media businesses. The freeze disrupted daily payments and business sales, left 32,000 pensioners without benefits, and suspended wages for hundreds of media workers. A deposit guarantee covers balances up to $38,000, but initial payouts were limited to some customers with small balances, no debts and accounts at another bank. Many savers remained unable to access money for essentials or planned expenses.

The collapse brought down President Santiago Peña, who resigned in an unsuccessful bid to keep the constitutional privileges of a former president; lawmakers removed him from his lifetime Senate seat, and he was impeached and placed under house arrest. Prosecutors charged him with breach of trust and administration for personal gain and sought preventive custody, while investigating suspected illicit enrichment, money laundering and influence-peddling. Peña denies wrongdoing. The inquiry centers on his past investment in the holding company that controlled Ueno, his appointment of the bank’s former chief executive to head the central bank, and the subsequent easing of rules that allowed public and pension funds to be invested in Ueno. An estimated $800m to $860m went into the bank, which regulators found had less than half the required solvency.