Bank Collapse Triggers Political Fallout
The collapse of the Paraguayan financial institution caused deep instability. It led to the removal of President Santiago Peña. Millions of citizens lost their funds. Pedro Volpe, a 50-year-old writer and lawyer, witnessed this crisis. He noticed the issue one day after payday. He found he could not see any balance in his banking app. These affected individuals were clients of Ueno Bank. Ueno was a digital credit entity that grew rapidly in South America. The central bank ordered the bank into resolution on Monday night due to insolvency.
Political Turmoil and Presidential Removal
This situation placed Ueno Bank at the center of a major economic and political crisis. The Paraguayan banking system neared total collapse. On Friday, consequences included the removal and house arrest of President Peña. The day before, Peña resigned to protect his constitutional status. This status made him a lifetime senator. However, the legislature stripped him of this protection. Peña now faces standard criminal proceedings. He shifted quickly from a regional favorite to facing massive violent protests and removal.
Investigative Focus and Citizen Hardship
The public prosecutor is investigating Peña over alleged undue favoritism toward Ueno. In just a few years since taking office in 2023, Ueno became the preferred bank for most Paraguayans. Volpe noted the bank's ease of use via mobile devices. It also offered superior investment returns compared to rivals. Volpe stated he now struggles to meet financial obligations. Many citizens cannot afford daily essentials like food. While he saved elsewhere, it is not enough for the immediate future.
Widespread Economic Impact
Ueno's popularity extended to the national football team and major sports clubs. This penetration caused a general sales drop for companies, reaching 80% this week. Media outlets tied to the same financial group suspended operations. This included radio stations and the century-old publication, La Tribuna . The impact on ordinary citizens was perhaps greater. Media blockage suspended salaries for 300 employees for 90 days. About 32,000 pensioners lost payments as their public funds were invested there. Historian Fabián Chamorro noted many cannot work due to payment issues. Protests grew daily; removing Peña was the congress's solution to prevent social explosion.
Peña's Rise and Ueno's Growth
Peña, formerly Finance Minister and an employee of the central bank and IMF, campaigned on a great Paraguay. He was the youngest president in Paraguayan democratic history at 44. He appointed Carlos Carvallo Spalding, Ueno's former CEO, to lead the central bank. In under three months, Spalding transformed Ueno from a financial company to a digital bank. Peña initially held about $1 million in shares bought in 2019. He sold these shares in April 2025, citing an investorperspective. Chamorro noted Ueno received favors under Peña, including relaxed regulations for public fund injections. Estimates place $800 to $860 million from state and pension funds in Ueno.
Irregularities and Central Bank Action
Local media revealed internal central bank reports showing irregularities. These included loans to companies within the same group. Peña's office dismissed this as a „false media campaign.”The bank had solvency less than half of what was required. The central bank only ordered resolution after the issue was raised.