Asuncion (Paraguay) (AFP) – Money trickled back to some Paraguayans hit by a sprawling banking crisis Monday, while their newly appointed president shuffled his cabinet and prosecutors sought international assistance to trace missing funds. The chaotic implosion of Ueno Bank almost a week ago locked almost half the population out of their bank accounts, upending the usually stable country. Distraught depositors spilled onto the streets to demand the removal of president Santiago Pena, who was ousted and is now in pretrial detention over his alleged links to the bank collapse.
The Central Bank, which seized Ueno over solvency concerns, had returned about $160 million to nearly 1.2 million people via a guarantee fund between Thursday and Friday. On Monday, the scheme widened to another section of clients. But the guarantee fund does not cover reimbursements of more than $36,000 per account — a reality that has produced uncertainty about the fate of public funds deposited in Ueno. Hundreds of workers and teachers marched through Asuncion on Monday, calling for the recovery of pension funds and threatening to stay the course until their demands are met.
Pena’s former vice president Pedro Alliana took the reins immediately after his predecessor’s impeachment. On Monday he asked “ministers, secretaries and the highest state authorities who hold positions of trust to submit their resignations.” “My goal is to strengthen coordination within the government and ensure more efficient management,” he wrote on X, adding that “all institutions will continue to operate with complete normality.” Senators meanwhile unanimously approved Jorge Schreiner as the next Central Bank chief. Alliana pledged not to abandon victims of the Ueno crisis during his inauguration and on Monday announced tax relief for this cohort.
Paraguayan prosecutors said they had sought help from the United States, Luxembourg, and Argentina to trace and recover assets linked to the collapsed bank. “Work is underway to locate and secure assets abroad, in order to repatriate them and compensate the victims,” a press release stated. On Sunday, US Secretary of State Marco Rubio called Alliana to congratulate him and reaffirm Washington’s support for its close ally, according to Paraguay’s new president.
Ueno began as a small fintech company with a digital-first model that attracted many low-income customers. Within three years it became a major bank handling state pensions and the accounts of several government entities. Pena owned shares in its holding company until he sold them last year. He is accused of using his influence as president to steer millions in government deposits to Ueno and of hiding or downplaying its financial woes despite warnings about questionable loans and solvency issues. He denies all charges.
Authorities placed the ex-leader under house arrest immediately after his impeachment and raided his home over the weekend as part of the probe into the bank collapse. They are attempting to open a vault they discovered during a raid on his holiday home in the lakeside town of San Bernardino. Ueno loans partially financed the construction of the mansion, according to the investigation. Its monthly mortgage payments cost six times more than Pena’s presidential salary, it showed.
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