Paraguay bank collapse sparks protests and impeachment bid against president
The collapse of a bank serving nearly 3 million customers in Paraguay has sparked street protests and an impeachment bid against President Santiago Peña, according to local media. Customers have been unable to access their money, including hundreds of millions of dollars held by the country’s social security system.
Hundreds of depositors, pensioners, students and workers gathered Wednesday in central Asunción, the capital, for a second day of demonstrations over the closure of Ueno Bank, ABC Color reported. They demanded the return of their savings and the removal of Peña and Vice President Pedro Alliana.
Police used a water cannon and tear gas near Congress after what they said was an attempt by a group of protesters to breach a security barrier, according to Última Hora.
Opposition lawmakers submitted an impeachment request backed by 35 signatures, accusing Peña of conflicts of interest and failures of oversight. They cited his stake in Ueno’s holding company when he took office and his appointment of former Ueno chief Carlos Carvallo to lead the Central Bank of Paraguay (BCP).
Carvallo resigned Tuesday. The lower house scheduled a special session for Thursday at 10 a.m. to consider the impeachment request, Última Hora reported.
The presidency denied rumors Wednesday night that Peña was resigning and said he remained focused on responding to affected depositors.
The crisis began Tuesday when the BCP placed Ueno into a resolution process after finding severe financial problems. Normal banking operations were halted, leaving customers unable to withdraw their deposits.
Adjustments to the bank’s accounts exposed a shortfall exceeding 1.6 trillion guaraníes (about $260 million) in funds set aside to cover potential losses, ABC Color reported. The bank also acknowledged that it could not replenish $70 million in required reserves.
The Social Security Institute (IPS) has approximately $355 million deposited at Ueno, representing 9% of its investment portfolio, financial manager Gladys Vera told ABC Color. She said the institute retained sufficient resources to meet payments.
A criminal complaint filed by Paraguay’s central bank alleges that Ueno made large unsecured loans to companies within its own corporate group and used new borrowing to cover repeated overdrafts, Diario HOY reported. It also describes an allegedly simulated $74.4 million sale of loans intended to conceal the bank’s exposure to related companies.
By Wednesday evening, a judge had accepted prosecutors’ charges against 27 people, according to Diario HOY. Prosecutors requested pretrial detention for principal shareholder Miguel Vázquez and house arrest for seven other detained executives. Hearings for the eight were scheduled for Thursday.
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Ella Rae Greene, Editor In Chief
