Ueno Bank collapse in Paraguay triggers political earthquake for Santiago Peña

A sudden blank screen took almost three million Ueno Bank customers by surprise in the early hours of Tuesday November 3. At around 03:24, the app of the Paraguayan institution, a key player in the system managing multimillion state funds, stopped displaying accounts and showed only the message: "We cannot display the balance".

Simultaneously, the Central Bank of Paraguay announced the institution was under intervention and its liquidation process had begun. The reason was a critical collapse in solvency ratio, bringing it below 50%. The impact triggered a political earthquake for President Santiago Peña's government.

Since Tuesday, crowds of outraged users have gathered around Ueno Bank's headquarters in Asunción and its 75 branches nationwide. The closed branches, guarded by security staff, have become scenes of extreme tension and desperation. Some customers in tears begged to withdraw funds for medicines, while others couldn't buy food for their children.

Public funds at risk

The institution held around $850 million in public funds, including resources from the Social Security Institute that support pensions and health coverage. The specter of an Argentine-style corralito (frozen bank accounts) immediately alarmed the population. Protesters carried placards reading: "Who will answer for a lifetime of savings? Will there be impunity?"

The Central Bank reminded customers that the law provides for a guarantee fund to reimburse each up to 75 minimum wages (about $37,700), but mistrust had already taken hold. The whole country held its breath during the bank's press conference confirming the closure.

Political fallout

Political opposition points to the Central Bank leadership as accomplices through omission, but the main target is President Peña. At the request of 35 lawmakers, the Chamber of Deputies will meet in an extraordinary session to vote on impeachment proceedings. The process requires 53 votes in the lower house and two-thirds Senate support.

The indictment accuses Peña of "poor performance of his duties," including conflicts of interest, alleged misappropriation of pension funds, and providing institutional protection to the Central Bank. The president cancelled his official schedule on Wednesday and later announced the departure of the central bank head.

Judicial pressure intensified with the arrest of eight Ueno Bank executives, including CEO Miguel Vázquez. The Association of Importers and Traders warned of an immediate 35% plunge in sales at major retailers as money became blocked and domestic consumption ground to a halt.

From advertising to collapse

Owned by influential Grupo Vázquez, Ueno Bank was recognizable for its fluorescent green design and had become ubiquitous in media and sports sponsorships, including major football clubs like Cerro Porteño and Olimpia, and the Defensores del Chaco stadium.

Only days earlier, the bank had boasted of an ambitious $100 million capitalization plan. However, the Superintendence of Banks uncovered an unsustainable reality: the institution couldn't meet a legal reserve requirement of $70 million demanded by the central bank. The financial collapse was a matter of numbers; the subsequent explosion, pure political dynamite.

Economist Santiago Peña, a former IMF official who came to power in 2023 promising to attract foreign investment, now faces the most critical moment of his administration despite Paraguay's strong economic growth under his leadership.