Paraguay's President Resigns Days After Ueno Bank Failure Freezes Deposits

Paraguayan President Santiago Peña announced his resignation after the sudden shutdown of Ueno Bank set off the country's deepest political crisis in years, the BBC reported. The bank, which is linked to Peña according to the BBC, was placed in an insolvency process that froze all of its operations and left customers cut off from their money.

The BBC said the resignation followed a vote by Paraguay's lower house of congress in favor of pursuing an impeachment trial. In a video message on social media, Peña said, "I want to apologise to the people if at any point I failed."

How a bank app going dark became a national crisis

According to Euronews, almost three million Ueno Bank customers found their accounts unreadable at about 3:24 a.m. on Tuesday, Nov. 3. The app displayed only a message saying the balance could not be shown. Around the same time, the Central Bank of Paraguay announced that it had taken over the institution and begun liquidating it.

Euronews said the central bank cited a collapse in the bank's solvency ratio to below 50%. The Superintendence of Banks found that Ueno could not meet a legal reserve requirement of $70 million, even though the bank had announced a $100 million capitalization plan only days earlier.

Ueno Bank was three years old and had grown quickly. Euronews described it as owned by the influential Grupo Vázquez and as a prominent sponsor of top football clubs and of the Defensores del Chaco stadium.

Crowds, arrests and an impeachment push

Euronews reported that crowds gathered outside the bank's headquarters in Asunción and its 75 branches nationwide, which were closed and guarded. Central bank board member Liana Caballero said no service, including the app and cards, had been active since the closure.

On Wednesday, eight senior executives were arrested, including chief executive Miguel Vázquez, Euronews reported. That same day Peña canceled his official schedule and stayed silent for much of the day. He later announced online that the head of the central bank was leaving and called on the courts to establish accountability.

The opposition accused central bank leadership of enabling the fraud through omission and aimed its main challenge at Peña, according to Euronews. At the request of 35 lawmakers, the Chamber of Deputies was to meet in extraordinary session on impeachment. Opening proceedings required 53 votes in the lower house and then two thirds of the Senate. The accusation cited poor performance of duties, conflicts of interest, alleged misappropriation of pension funds and protecting the central bank. Euronews did not report Peña's response to those charges.

Why it matters for Paraguayans and the economy

The most immediate effect falls on account holders. Euronews said people lined up in distress, some saying they could not pay for medicine or food without access to their savings. Authorities pointed to a legal guarantee fund that reimburses each customer up to 75 minimum wages, which Euronews put at about 228 million guaraníes, or $37,700. Euronews said that did little to ease public mistrust, and that fears of an Argentine-style corralito, a freeze on withdrawals, spread quickly.

Public money is also exposed. Euronews reported that Ueno held about $850 million in public funds, including resources of the Social Security Institute that support workers' pensions and health coverage.

The effects reached commerce as well. The Association of Importers and Traders warned of an immediate 35% drop in sales at major retailers, Euronews said, as blocked money halted domestic consumption.

A politically damaging fall for a growth-focused leader

Peña, an economist and former International Monetary Fund official, took office in 2023 promising to attract foreign capital, Euronews said. Paraguay has recorded one of South America's strongest economic growth rates under his leadership, the outlet noted, which makes the banking collapse the most serious test of his administration.

The BBC said its report was still developing. Details of what happens to the impeachment effort and to Ueno Bank's customers had not been disclosed in the reports available at publication.

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Around Prague, based on reporting by Euronews, BBC News