Banking Catastrophe Topples Paraguay President as Millions Face Savings Nightmare

Paraguay's banking catastrophe has triggered mass protests, frozen millions of accounts, and plunged President Santiago Peña into an extraordinary political crisis. As furious customers demand access to their savings, one man's emotional accusation has captured the public anger: 'Peña is playing with savers' money.'

Ueno customer Felipe Rodriguez said this while choking up, demanding accountability. He also accused Vice-President Pedro Alliana of involvement, adding another explosive dimension to a scandal threatening Paraguay's political establishment.

Three Million Customers Caught in Banking Catastrophe

The crisis erupted after Paraguay's central bank intervened in Ueno Bank, a fast-growing digital lender serving approximately three million customers in a country of 6.5 million people.

Regulators uncovered poorly documented loans to companies connected to the bank's owners, as well as expenses incorrectly counted as assets. Once the accounts were corrected, Ueno's capital fell below half the legally required minimum, prompting the central bank to seize control.

The consequences were immediate. Ueno's app, payment cards, and transfers stopped working, leaving customers unable to access their money. Other banking apps also experienced outages as panicked customers rushed to open accounts elsewhere.

$800 Million in Public Funds Raises Explosive Questions

The Paraguay bank collapse has become particularly controversial because Ueno held approximately $800 million (£596 million) in public deposits, including money connected to the state pension and health fund and operators of the country's hydroelectric dams.

Peña's previous business connections have intensified scrutiny. He held a stake in Grupo Vázquez, Ueno's parent company, until March 2025. He has denied wrongdoing and maintained that he sold his stake.

Opposition lawmakers accused him of conflicts of interest, pension-fund misuse and shielding the bank from scrutiny. Attorney General Emiliano Rolón Fernández has ordered three criminal investigations examining regulatory oversight, the bank's collapse and the placement of public funds.

Eight Executives Detained as 27 Face Charges

Authorities detained eight Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale. Six were ordered jailed pending trial, while two were placed under house arrest.

Prosecutors have also charged 27 bank officials and business associates with alleged offences including breach of trust and attempted fraud.

Meanwhile, the deposit guarantee scheme offers some relief. Authorities say deposits of up to approximately $38,000 (£28,200) per customer are protected, covering the full balances of an estimated 97% of depositors. Initial repayments have begun, although larger balances remain a concern.

Peña's Political Future Hangs in the Balance

On 5 November, Peña announced his resignation as impeachment proceedings gathered momentum. The Chamber of Deputies subsequently voted 78–0 to approve impeachment charges and send them to the Senate.

The crisis has fractured his Colorado Party. Powerful party leader Horacio Cartes withdrew support, while Alliana distanced himself from Peña. The vice-president's own impeachment motion was rejected by lawmakers.

The economic fallout is equally alarming. Paraguay's guarani weakened nearly 5% against the US dollar, while sovereign bond prices fell.

For millions of customers, however, political manoeuvring offers little comfort. They want their savings restored, answers about how a major digital lender collapsed, and accountability from those responsible.

Rodriguez's emotional accusation has become a powerful symbol of that anger. Paraguay's leaders now face a question that cannot be answered with political promises alone: who will restore public confidence and protect the money ordinary people worked years to save?