Lawmakers in Paraguay have launched impeachment proceedings against President Santiago Peña folloowing the sudden seizure of Ueno Bank. The collapse of the digital lender, which held $800 million in public deposits, has ignited massive protests and a political rebellion within the ruling Colorado Party.
The $800 million digital banking crisis and 280,000 displaced customers
The collapse of Ueno Bank represents a systemic shock to Paraguay's financial infrastructure, given that the digital lender had captured more than 60% of the nation's adult population. As reported by the source, the seizure of the institution has left approximately 280,000 citizens seeking new banking arrangements, a mass exodus that crashed mobile applications for other commercial banks in the region.
This financial instability has spilled into the streets of Asunción, where retirees, students, and workers have protested the perceived plunder of national resources. The social unrest is compounded by the fact that the failed institution was a high-profile sponsor of the national soccer team, making its sudden disappearance a deeply personal blow to many citizens.
The $39 million single-day breach and accounting irregularities
Regulatory investigations into Ueno Bank have uncovered severe breaches of lending laws and significant accounting errors. According to the report, regulators identified a single day in September 2025 where nearly $39 million was transferred to three companies affiliated with the bank's owners, a move that violated legal lending limits.
The bank's stability was further undermined by the misclassification of expenses as assets. Once these accounting corrections were applied, the central bank found that Ueno's capital cushion had plummeted to less than half of the legal minimum required to absorb losses. These findings ultimately forced the central bank to seize the lender on Tuesday and begin the liquidation process.
Horacio Cartes' revolt within the Colorado Party
The political survival of President Santiago Peña is now in doubt following a fracture within his own Colorado Party. Former President Horacio Cartes, a powerful figurehead within the party, has officially withdrawn his support for the current administration, effectively catalyzing a party-wide rebellion.
This internal revolt has moved the impeachment process into the lower house of Paraguay's Congress. for President Peña to be removed from office, the case must first secure a two-thirds majority in the lower house before moving to the Senate, where a second two-thirds vote would be required to finalize his removal.
The unanswered question of President Peña’s complicity
While the administration has detained eight senior Ueno executives—including founder Miguel Vázquez and President Juan Manuel Gustale—the direct involvement of the presidency remains a central mystery. The report notes that prosecutors have charged 27 bank officials and business associates with offenses such as fraud and breach of trust, but it does not specify if any evidence links President Peña to the bank's illegal lending practices.
Public suspicion remains high, with protesters like Luis Pineda accusing the administration of stealing national savings. It remains unverified whether the President's initial defense of the bank's practices was a genuine misunderstanding of the data or a deliberate attempt to shield a politically connected institution from regulatory scrutiny.
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