Paraguay’s president impeached amid bank collapse crisis
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president → impeach → crisis
Paraguay’s President Santiago Pena is facing impeachment following the collapse of Ueno Bank, a major digital bank, which has plunged the South American country into its deepest political crisis in more than a decade.
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which → face → decade
Pena announced his resignation on Thursday, but politicians formally filed impeachment charges against the president.
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politicians → announce → president
Pena, a former International Monetary Fund (IMF) economist, then requested a 72-hour extension to present his defence at an impeachment hearing, because he had been given less than 12 hours to answer “an accusatory writ and about 300 pages of attachments”, adding: “That is not due process.”
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That → request → attachments
listHowever, the Senate convened a rare session on Friday to consider Pena’s political future, opting to move forward with efforts to remove him from office.
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Senate → convene → office
Until March 2025, Pena held a stake in Grupo Vazquez, the parent company that owns Ueno Bank.
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that → hold → Bank
Ueno Bank was established in 1976 and remained a small financial operation for decades.
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Bank → establish → decades
After being granted a full banking licence in 2023, it rebranded and grew to become a household name in Paraguay within five years.
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it → grant → years
Customers were incentivised with cashback offers on groceries and it built a network of more than 70 branches.
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it → incentivise → branches
The bank sponsored Paraguay’s national football team and its name was plastered across the country’s main stadium.
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name → sponsor → stadium
Ueno bank reported that it had 3 million customers, roughly 60 percent of Paraguay’s adult population.
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it → report → population
The digital bank managed $800m of public funds, including about $380m invested by Paraguay’s state pension and health fund, according to data from the Central Bank of Paraguay.
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bank → manage → Paraguay
What has happened to the bank?
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What → happen → bank
On Monday, Paraguay’s central bank decided to put Ueno bank into resolution – the strongest action it can take short of placing the bank into liquidation – after finding that its solvency ratio, a measure of its capital against its risk-weighted assets, had dropped to less than half of the legal requirement.
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ratio → decide → requirement
Resolution allows regulators to transfer a failing bank’s deposits to other institutions before liquidating remaining assets.
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regulators → allow → assets
Customer accounts were frozen, leaving millions of depositors, retirees and workers scrambling to recoup their savings and unpaid wages.
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accounts → freeze → savings
Ueno Bank’s nearly 3 million customers still cannot withdraw cash, make digital payments or use their bank cards.
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customers → withdraw → cards
“Santiago Pena and the Colorado Party have stolen all our savings,” said Luis Pineda, one of the protesters marching to Congress on Wednesday.
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Pineda → steal → Wednesday
“We are fed up with 70 years of plunder,” he added, an apparent reference to the right-wing Colorado Party which has ruled Paraguay almost uninterrupted for more than seven decades.
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which → feed → decades
What caused the Ueno Bank collapse?
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What → cause → collapse
Regulators at Paraguay’s central bank found a pattern of risky lending to “insiders”, reported ABC Color, a leading Paraguayan newspaper.
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Regulators → find → insiders
This means that executives or major investors of a bank have approved questionable, low-security loans for themselves, their families or their own businesses.
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executives → mean → themselves
In this case, Ueno had loaned $146m to companies tied to its owner, Grupo Vasquez, which has links to Paraguay’s president.
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which → loan → president
Investigators found loaned amounts went beyond legal limits and were not backed up by enough collateral to cover the debts if they went bad.
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they → find → debts
Central Bank regulators found Ueno’s loans to companies linked to its owners were poorly documented while the bank had wrongly counted some expenses as assets.
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bank → find → assets
Once the books were corrected, Ueno’s capital, the cushion banks must keep to absorb losses, was revealed to be less than half the legal minimum.
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banks → correct → losses
How is President Pena involved?
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Pena → involve → ?
Protesters blame President Pena personally for the crisis because of his ties to the failed bank.
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Protesters → blame → bank
Until recently, he held a financial stake in Ueno Bank’s parent holding company.
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he → hold → company
After taking office in 2023, Pena appointed the former head of Ueno’s predecessor company, Carlos Carvallo, to head the country’s central bank, giving an insider the role of overseeing the institution.
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Pena → take → institution
Carvallo has resigned from his position.
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Carvallo → resign → position
Pena denies any improper ties to the bank.
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Pena → deny → bank
Protesters also say they are unhappy that so much public pension money was invested with the bank under Pena despite warnings about its high-risk insider lending practices.
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money → say → practices
What happens to people with savings in the bank now?
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What → happen → bank
Paraguay’s Congress rushed through a law on Wednesday, providing a state-guaranteed fund for repaying depositors within five business days, starting on Thursday with small accounts holding up to $1,600.
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Congress → rush → 1,600
The fund insures up to about $36,000 per customer, which the central bank says will cover the full balances of an estimated 97 percent of customers.
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bank → insure → customers
What other action is being taken?
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action → take → ?
Paraguay’s Public Prosector’s office has ordered multiple criminal investigations.
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office → order → investigations
On Thursday, a judge ordered six Ueno executives, including founder Miguel Vazquez and bank President Juan Manuel Gustale, to be detained pending trial, while two others were placed under house arrest.
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others → order → arrest
In all, prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud.
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prosecutors → charge → trust
…and 22 more, not listed.
The Aporia
