Paraguay impeachment drive advances as Ueno Bank collapse deepens crisis

Paraguay's Senate has moved ahead with efforts to remove President Santiago Pena after a rare session on Friday, intensifying a political crisis triggered by the collapse of Ueno Bank. The decision came as lawmakers weighed impeachment charges already filed against the president, despite his request for a 72-hour extension to prepare his defence. Pena said he had been given less than 12 hours to respond to what he described as an accusatory writ and hundreds of pages of attachments.

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The case has sharpened scrutiny of Pena's past links to Grupo Vazquez, the parent company of the collapsed lender, which he held until March 2025. Ueno Bank grew rapidly after receiving a full banking licence in 2023, expanding from a long-established but small operation into a major digital bank with more than 70 branches and millions of customers. According to the supplied report, the bank also managed about $800m of public funds, including roughly $380m invested by Paraguay's state pension and health fund.

The central bank placed Ueno Bank into resolution on Monday after finding that its solvency ratio had fallen to less than half the legal requirement. Resolution is the strongest step regulators can take short of liquidation, and it allows authorities to transfer deposits to other institutions before winding up remaining assets. Customer accounts were frozen, leaving depositors, retirees and workers trying to recover savings and unpaid wages.

The collapse has also prompted wider questions about oversight, public fund management and the speed of regulatory intervention. The political fallout is significant because the crisis has been described as Paraguay's deepest in more than a decade. The impeachment effort now sits alongside a banking emergency that has affected confidence in the country's financial system and in the institutions responsible for supervising it.

The situation is especially sensitive because Ueno Bank had become a highly visible brand, sponsoring the national football team and building a large retail presence across the country. Its rapid rise and sudden failure have made the case a test of both governance and financial regulation. The bank's history helps explain the scale of the shock.

Established in 1976, it remained a modest financial operation for decades before its 2023 licence renewal and rebranding accelerated its growth. The supplied report says it reached about 3 million customers, or roughly 60% of Paraguay's adult population, within five years of that expansion. That reach meant the collapse was not limited to a single institution but touched a broad share of households and public-sector funds.

The Senate's decision to continue with removal efforts also reflects the political weight of the allegations. Lawmakers have focused on whether Pena's previous stake in the parent company created a conflict of interest, and whether authorities failed to act on warning signs around the lender's condition. Pena, a former International Monetary Fund economist, has argued that he needs more time to answer the charges properly.

His request for an extension suggests the process may continue to unfold over several days rather than ending with Friday's session. What happens next will depend on how quickly the Senate advances the impeachment process and whether Pena is given additional time to present his defence. It is also unclear how fast affected customers will regain access to their money, or how the bank's assets will be handled under resolution.

The broader legal and regulatory consequences remain open, including any further action over public funds placed in the bank and the oversight failures now under scrutiny.

Paraguay's Senate has resumed impeachment proceedings against President Santiago Pena as the country faces a widening financial and political crisis linked to the collapse of Ueno Bank. Lawmakers met in a rare session on Friday to consider the president's future after charges were formally filed the previous day. The move came despite Pena's resignation, which has not halted the effort to remove him from office.

Pena has asked for a 72-hour extension to prepare his defence before the Senate. The lower house of Congress had already approved impeachment charges in a unanimous 78-0 vote, underscoring the scale of political support for the proceedings. The president, elected in 2023, said in a video address on Thursday that he wanted the return of public funds to be guaranteed and apologised for failing to prevent the crisis.

The impeachment drive is tied to central bank intervention earlier this week at Ueno Bank, one of Paraguay's fastest-growing digital lenders. Regulators said the bank had breached minimum solvency requirements, prompting action that has since drawn scrutiny over oversight failures. According to the supplied report, the collapse of Ueno, which held $850m in public funds, has left more than half of Paraguay's population without access to their accounts.

The case has become a major test of confidence in Paraguay's financial system and in the institutions meant to supervise it. Lawmakers have accused Pena of a conflict of interest because he previously held a stake in Ueno's parent company, Grupo Vazquez, until last year. They have also questioned whether authorities failed to act on warnings about the lender's financial position, raising broader concerns about governance and regulatory independence.

The fallout has already reached the top of the financial system. Paraguay's central bank chief, Carlos Carvallo, has resigned, and arrest warrants were issued for eight Ueno executives, who later turned themselves in. The attorney general has also ordered three criminal investigations into the bank's collapse, including probes into regulatory oversight and the placement of public funds in the institution.

What remains unclear is how quickly the Senate will move after Pena's request for more time, and whether the impeachment effort will proceed to a final vote. It is also not yet clear how fast affected account holders will regain access to their money or how the criminal investigations will develop. For now, the crisis has placed Paraguay's presidency, banking supervision and handling of public funds under intense scrutiny.

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