Ueno Bank Depositors Wait for Their Money as Paraguay's Alliana Takes Over

Paraguay removed a president in a day. Getting 3 million people their money back will take considerably longer, and that is the part that matters now.

On Friday, the Senate voted unanimously — 44 votes — to remove Santiago Peña from office over the collapse of ueno, the digital bank that held the accounts of roughly 3 million Paraguayans, about 60 percent of the country's adults. Hours later, prosecutors placed Peña under house arrest on suspicion of breach of trust and ordered him to appear before the economic crimes unit on Saturday morning. Vice President Pedro Alliana, 52, was sworn in the same day as Paraguay's 53rd president and will serve out the term to August 2028.

Peña had offered to resign the day before. Congress refused to accept it, and the reason was deliberate: a resignation would have handed him a lifetime Senate seat and the immunity that comes with it. Impeachment took that protection away. The Chamber of Deputies had already voted 78-0 to impeach; the Senate's unanimous removal, with Peña's own Colorado Party voting against him, completed the fastest presidential downfall in the region's recent memory. The political question that consumed the week is closed.

The financial question is not. Ueno's accounts, cards and app have been frozen since November 3, when the central bank placed the lender in resolution after finding its solvency ratio had fallen to 5.56 percent, less than half the 12 percent legal minimum. Regulators found lending to companies linked to the bank's owners that was poorly documented, expenses counted as assets, and — according to ABC Color, cited by Al Jazeera — $146 million in loans to firms tied to Grupo Vázquez, the conglomerate behind the bank. Ueno held about 8.9 percent of Paraguay's deposit system. Fitch had rated it BB as recently as March.

Repayment has begun, and the design of it tells you where the risk sits. The central bank started guarantee payouts on November 5, first to depositors with combined balances of up to 10 million guaraníes — about $1,565 — who owe ueno nothing and hold an account at another bank. They get their full balance. Congress passed a law creating a state-guaranteed fund to repay depositors within five business days, starting with the smallest accounts. The statutory guarantee ceiling is 228.3 million guaraníes, roughly $36,000, and the central bank estimates 97 percent of depositors fall entirely within it — meaning the vast majority should, in principle, recover everything.

In principle is doing a lot of work there. The first group is the easy slice: small balances, clean accounts, money that can be moved quickly. The harder question is whether the guarantee fund can keep paying as the balances get larger and the queue gets longer — and whether the roughly $800 million to $850 million in public funds caught in the collapse, including about $380 million from the IPS social-security fund, is recoverable at all. Depositors above the ceiling face a longer, uncertain wait tied to asset recovery in the resolution. Nobody outside the central bank yet knows whether the fund's resources match its promises, and the timetable in official notices is inconsistent — one report cites five business days, another fifteen.

That is why the politics, dramatic as it was, is the smaller story. A president fell in 48 hours because every institution that could have protected him decided not to. The depositors have no such shortcut. Their money returns only as fast as a guarantee system that has never been tested at this scale can pay it out, and the test is only beginning. Alliana inherits a country whose faith in its banks — and in the people who supervised them — has just been broken in public. Restoring it will not be measured in votes. It will be measured in whether the smallest savers, and then the rest, actually see their money again.