Paraguay Bank Collapse Forces President Out as Savers Seek Repayments
Paraguay banking crisis has intensified scrutiny as prosecutors investigate his alleged involvement.
Moreover, the former president, Santiago Peña, is being held.
Peña was removed from office on 6 November after the collapse of Ueno Bank.
Moreover, this occurred amid the Paraguay banking crisis.
His former deputy, Pedro Alliana, has taken over the presidency.
Additionally, amid the Paraguay banking crisis, transfer of power has settled who leads the country, while investigations and repayments continue.
The scale of the disruption is substantial, although figures describing those affected require care. Ueno had advertised a customer base approaching three million. On 7 November, however, central bank officials said they had identified about 1.8 million depositors.
Those figures describe different things: a bank’s customer total is not necessarily the number of people holding deposits. A frozen balance also does not automatically represent a permanent loss. The amount eventually returned depends on deposit protection and the recovery process.
Why did Ueno Bank collapse?
The immediate crisis followed a decision by the Central Bank of Paraguay, known as the BCP, to place Ueno into resolution. The decision was taken on 2 November and announced publicly the following day.
According to the regulator, Ueno lacked sufficient capital to meet the required solvency standard. The BCP identified lending to businesses connected with the bank’s owners as an important problem and said it had formally warned the institution on 5 June to bring those exposures within legal limits.
The regulator also cited additional provisions, deteriorating liquidity and weaknesses in documentation. Its account places the intervention at the end of a supervisory process extending over several months.
Related-party lending involves loans to businesses connected to a bank’s owners. Such lending faces restrictions because depositors’ money can become concentrated in the owners’ other ventures. In Ueno’s case, the central bank said investigators had to examine financial flows to identify connections that were not readily apparent from ownership records.
Ueno’s rapid expansion helps explain why its failure reached so widely across Paraguayan society.
The institution began operating as a bank in November 2023 and used digital services to attract customers. Its activities extended beyond personal accounts into public-sector deposits and payments.
When services stopped, customers were unable to use their money through the usual channels. The disruption also affected businesses that depended on electronic transactions. An importers’ and traders’ association warned of a sharp slowdown in commercial activity after the intervention.
The consequences reached sport as well. Members of Paraguay’s national football team said they had savings at Ueno, while the bank’s involvement in football had made its name familiar far beyond financial circles.
Public funds and pensions caught in the crisis
Public money is a central part of the controversy. The Instituto de Previsión Social, or IPS, which administers pensions and health coverage, had hundreds of millions of dollars invested in Ueno.
On 4 November, IPS finance manager Gladys Vera put the exposure at approximately $355 million, representing about 9% of the institution’s investments. She said its money was distributed across 14 banks.
Vera defended the investment decisions, saying they relied on official indicators of banks’ financial condition. IPS was also preparing steps to recover its resources.
That defence matters because the investigation concerns decisions made across several institutions. Establishing who authorized investments, what information they received and how they responded will be distinct questions.
IPS has sought to separate fears about its investments from the immediate payment of pensions.
The institution says regular monthly pensions are financed through contributions from employers and workers, rather than depending on returns from its investment portfolio. It also says money had already been reserved for the additional annual payment.
In a statement issued on 7 November, IPS said its 90,000 retirees would receive their pensions and the annual additional payment on 17 November. Around 32,000 people who had collected payments through Ueno were to be transferred to eight other banks.
These are commitments for a future payment date. They do not establish that the affected institutional investments have already been recovered.
Earlier contingency planning also considered where pensioners lived and how easily they could reach replacement banks. IPS said beneficiaries would subsequently be able to choose their preferred institution after the exceptional reassignment.
How Santiago Peña lost the presidency
The political response accelerated as the banking disruption spread.
On 5 November, the Chamber of Deputies approved proceedings against Peña with 78 votes. He submitted his resignation during the session, but the process moved towards a Senate decision on his conduct in office.
Legislators’ accusations included his interests in Ueno Holding, the appointment of former Ueno executive Carlos Carvallo to lead the central bank, and the concentration of pension institution funds in the lender.
The governing Colorado Party backed action against Peña while declining to support proceedings against Alliana. That decision helped determine the succession that followed.
The Senate removed Peña the next day, with all 44 senators present voting in favor.
His lawyers disputed the basis of the case. The defence argued that legislators had not identified a specific legal rule he had broken and were attributing decisions by the central bank and IPS to the president.
Senators rejected a request for another 72 hours to prepare the defence. Peña did not attend the hearing, and his lawyers reserved the possibility of challenges through domestic and international channels.
The vote established a political finding about his performance in office. It was not a criminal conviction: the allegations now being investigated must be assessed through separate judicial proceedings.
What prosecutors allege — and Peña’s defence
The criminal inquiry extends beyond the former president.
On 4 November, prosecutors announced charges against 27 people over alleged financial irregularities involving Ueno. Their statement described investigations into loans and overdrafts made during 2025 and 2026 to related businesses, the adequacy of guarantees and possible transfers between connected companies.
The following day, the prosecutor general ordered three further investigations covering supervision of the bank, its resolution and the placement of public funds.
These proceedings involve different individuals and different alleged conduct. Charges, requests for detention and measures concerning assets should not be read as findings that every allegation has been proved.
Peña’s public statements about Ueno are also under scrutiny.
In their filing, investigators allege that he continued defending the bank despite technical warnings about its lending and financial position.
The filing identifies several occasions when he publicly supported the institution. Prosecutors argue that those interventions helped sustain confidence while concerns remained unresolved.
Peña’s denial of wrongdoing remains central to the case. His earlier business links to the bank’s parent group explain the scrutiny, but those links alone do not establish criminal responsibility. The investigation must address the particular actions alleged and the evidence supporting them.
Protesters demand their savings back
Outside the institutions handling the case, protesters have focused on more immediate concerns.
Demonstrations in Asunción brought together savers, pensioners, students and workers. Participants expressed fears about ordinary living costs and retirement savings, alongside demands for accountability.
Protests also took place in Ciudad del Este, where demonstrators partially obstructed a major route. Some participants opposed Alliana taking over as well as demanding Peña’s removal.
There have been confrontations with police during the week, including the use of tear gas and water cannons against a demonstration in the capital.
The different demands help explain why changing the president does not, by itself, answer every grievance raised in the streets. For those affected, political accountability and access to savings remain separate concerns.
From economist to president: Peña’s rise and fall
For Peña, the crisis represents a dramatic reversal of the career that took him into the presidency in 2023.
An economist by training, he worked at Paraguay’s central bank and at the International Monetary Fund before becoming finance minister under former president Horacio Cartes.
He joined the Colorado Party in 2016 and later secured its presidential nomination. Peña and Alliana won the 2023 election together, with their term due to continue until 2028.
His financial background had been an important part of his public profile. It now places particular attention on his handling of a crisis involving banking supervision and public investments.
The collapse has brought his political career and business connections under scrutiny at the same time, with legislators and prosecutors examining different aspects of his conduct.
Who is Pedro Alliana, Paraguay’s new president?
Alliana arrives with substantial experience inside the same governing party.
The 52-year-old previously served as governor of Ñeembucú and spent two terms in the Chamber of Deputies before becoming vice-president in 2023. He is also a close political ally of Cartes.
His accession changes the head of government while leaving the Colorado Party in power. It does not represent an opposition election victory.
Alliana will complete the presidential term ending on 15 August 2028. Antonio Barrios has been sworn in as vice-president.
In its response to the transition, the government has presented the constitutional succession as evidence that institutions can address a crisis within the legal framework.
Alliana has also promised support for people affected by the bank’s collapse, placing the recovery of depositors’ money among the immediate priorities of his presidency.
New government begins assembling its cabinet
Alliana began putting together his administration on Saturday, combining new appointments with figures from the previous government.
Ariel Martínez was appointed interior minister. Rolando de Barros moved from the environment portfolio to lead the Civil Cabinet, while Juan Carlos Baruja was moving from housing to public works.
The appointments announced so far do not amount to a completed cabinet. Some ministers had confirmed they would remain, while other positions were still awaiting confirmation on Sunday.
Alliana also held meetings on medicine supplies and the situation of Ueno customers. Those discussions reflect the overlapping demands on the new administration: maintaining public services while responding to the banking emergency.
A test for Paraguay’s economic stability
The upheaval comes after years in which Paraguay built a reputation for economic stability.
The economy grew by 6.6% in 2025. Agricultural exports, hydroelectric resources and generally restrained public debt have supported its economic position, alongside recent improvements in sovereign credit ratings.
Those national indicators do not answer questions about the management of an individual bank. Equally, Ueno’s failure should not automatically be treated as proof that every Paraguayan lender faces the same problems.
The BCP has described the case as isolated and said the wider banking system remains sound. That is the regulator’s assessment, which sits alongside the continuing task of managing Ueno’s resolution.
When will depositors get their money back?
For depositors, the distinction between an advance and full recovery is particularly important.
The deposit guarantee covers eligible balances up to 228.3 million guaraníes, equivalent to 75 monthly minimum wages. Payments are being processed in stages.
BCP official Julio Cristaldo said some accounts needed extra checks, including where money was reserved for services or automatic payments. Customers with more than one account could receive different balances at different times.
He also said customers without another bank account would be assigned one. Recovery above the guarantee ceiling would depend on the resolution process.
A payment delay can therefore have several explanations. It cannot, on its own, establish the final amount a customer will lose.
By 7 November, officials said advances had been credited for approximately 1.2 million accounts.
That figure is a measure of progress, not confirmation that every affected person has received all their savings. It also does not mean that every transfer had become immediately accessible at the receiving bank.
The BCP said further batches would resume on Monday, 9 November, while banks could continue processing money already transferred to them over the weekend.
The next stages will show how quickly the scheme reaches customers whose accounts require additional checks and those still waiting for arrangements at another institution.
What happens next?
The disruption also reaches some investments held outside ordinary deposit accounts.
The BCP’s securities regulator temporarily restricted withdrawals from specified mutual funds with Ueno-linked investments. It said the measures did not apply to every fund and did not themselves mean that an affected fund was closing.
New valuation rules were intended to allow investors to be treated consistently. Reopening was to take place gradually once individual funds met the relevant requirements.
Those arrangements underline the separate processes still under way: examining alleged wrongdoing, recovering institutional investments and restoring access to money. For households awaiting pension transfers or deposit repayments, the immediate milestones are the next scheduled payments.
