A banking crisis has erupted in Paraguay, triggering protests after millions of depositors, including pensioners, reportedly lost access to their money. Ueno Bank SA, one of the country's largest and fastest-growing digital lenders, reportedly collapsed amid a severe insolvency crisis in the country.
Days after the bank collapse triggered chaos, Paraguay President Santiago Peña resigned on Thursday. Paraguay's opposition had earlier moved to impeach the President the Central Bank's takeover of the major lender, which has links to him, news agency AFP reported.
The Central Bank said it intervened in Ueno Bank due to a severe capital shortfall, with the move aimed at "protecting depositors and preserving the stability of the financial system".
The collapse has sent shockwaves across Paraguay, with depositors left unable to access their savings and bank accounts. Ueno says it has more than three million customers, nearly half of Paraguay's population, and manages millions of dollars in pension funds and other state funds, according to AFP.
President resigns
Pena announced his resignation in a video posted to X where he said he was stepping down to preserve the country’s stability and democratic institutions as massive protests rocked Asuncion city for a third day.
“I have made the decision to submit my resignation as president of the republic. I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions," he said.
{{/usCountry}}“I have made the decision to submit my resignation as president of the republic. I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions," he said.
{{/usCountry}}Pena also offered an apology but stopped short of accepting responsibility for the banking crisis. “I also want to apologize to the people if I have failed them at any point,” he said. “It was never my intention to betray the trust they placed in me."
He said his priority was ensuring depositors recovered their savings. “Behind every deposit are years of hard work, sacrifice and family dreams,” he said.
Banking crisis leaves millions distraught
With customers left scrambling for answers, scores of people gathered outside shuttered bank branches in the capital, Asuncion, while hundreds more crowded around a Ueno branch in Ciudad del Este, Bloomberg reported. Several customers also took to social media to express their grievances as concerns mounted over the banking crisis.
Purported visuals from Paraguay shared on social media show anxious locals facing off with the law enforcing agencies on the streets of Paraguay with long lines of people trying to withdraw their money from Ueno branches.
(HT could not independently verify the authenticity of the video)
Distraught depositors joined protests around the capital on Tuesday and Wednesday.
"I lost my entire life savings. They should all go to jail," Marcelino Vergara, 68, was quoted as saying by AFP.
Amid rising anger, President Pena has tried to placate the Ueno depositors.
"The financial system is sound. It has institutions and protective mechanisms in place," Pena said in a video posted to X on Wednesday.
He also enacted a law that "will allow savers to withdraw, in the shortest possible time, part of the guarantee funds so that the money returns to the hands of those to whom it belongs."
Central Bank president Carlos Carvallo, who previously chaired Ueno, stepped down on Tuesday on President Pena's request.
The banking crisis also kicked up a political storm after the opposition presented a motion to remove President Pena, who last year sold his shares in a group that controlled Ueno Bank.
The request for his dismissal for alleged misconduct and conflict of interest received 35 signatures among opposition lawmakers, dissident ruling party lawmaker Mauricio Espinola was quoted as saying by AFP.
With inputs from agencies