Paraguay's Senate scrambles to pay thousands of workers as bank collapse topples a president

A Senate committee in Asunción met for hours on Thursday with labor officials and representatives of roughly 6,000 workers left unpaid after the collapse of Ueno Bank, Paraguay's largest digital lender, as the fallout from the country's worst banking failure in decades continued to widen. The session, held by the Senate's Legislation, Codification, Justice and Labor Committee, came nine days after the Central Bank seized the bank and little more than a week after Congress removed President Santiago Peña from office over his ties to the failed institution.

Peña, who took office in 2023, is now in pretrial detention at a military facility in the capital, charged with breach of trust and self-dealing. His successor, Vice President Pedro Alliana, was sworn in on November 6 to serve out the term through 2028. The upheaval has left nearly 2.9 million depositors, out of a national population of roughly 6.5 million, waiting on repayments, while thousands of employees at companies tied to the bank's parent conglomerate have gone without pay.

A bank seized, a president charged

The crisis began on November 2, when the Central Bank's board ordered a formal resolution process for Ueno Bank after finding its solvency ratio had fallen below half the legally required minimum. The notice, issued under Paraguay's bank-resolution law and circulated to the courts by the Supreme Court of Justice, suspended legal deadlines in pending lawsuits involving the bank. Ueno had grown rapidly into the country's leading digital lender, with close financial ties to Peña, who had been a shareholder in its parent holding company before taking office.

Public money was deeply entangled in the failure. The state social security institute held roughly $355 million at Ueno, and the state electricity utility and other public bodies had tens of millions more on deposit, bringing total public exposure to an estimated $850 million, according to regional reporting corroborated by the Buenos Aires Herald. Eight senior bank executives, including the founder, were arrested within days of the takeover.

Opposition lawmakers filed impeachment papers on November 4, and the Chamber of Deputies approved the accusation unanimously the next day. The Senate, sitting as a tribunal under Basilio Núñez, found Peña guilty of malfeasance in office on November 5 and removed him, rejecting his request for more time to prepare a defense. Deputy Rocío Vallejo, leading the prosecution, told senators the president had managed state assets in a way that put them at risk. Alliana was sworn in as president hours later and pledged full compensation for affected depositors. Two days after that, prosecutors charged Peña and former Central Bank president Carlos Carvallo, and a judge ordered both held in pretrial detention, according to court filings reported by Devdiscourse. Investigators later searched Peña's lakeside home in San Bernardino and, on November 10, opened a hidden high-security vault discovered behind a false wall; multiple Paraguayan outlets, including Democrata, reported it was found empty, a detail prosecutors have not officially confirmed.

• Nearly 2.9 million Ueno Bank customers affected, in a country of about 6.5 million people
• An estimated $850 million in public-sector funds held at the bank before the seizure
• About 41 companies, roughly 6,000 workers directly and 40,000 indirectly, caught up in unpaid-wage disputes tied to the bank's parent group
• Deposit guarantee advance of up to 40 minimum monthly wages per account holder, under an emergency law passed November 4

Workers caught in the middle

While depositors have drawn most of the attention, Thursday's hearing turned to a less-visible group: employees of roughly 41 companies linked to the bank's parent conglomerate, Grupo Vázquez, who have not been paid since the collapse. Committee chair Senator Derlis Maidana pressed officials for "concrete responses," and Labor Minister Mónica Recalde told lawmakers her ministry would invoke provisions of the labor code that give workers' wage claims priority over other creditors.

"Vamos a aplicar los artículos 247 y 248 del Código del Trabajo" — Labor Minister Mónica Recalde, telling the Senate committee the ministry would apply the labor code's worker-priority provisions to recover unpaid wages.

According to the official account of the committee session, officials are also weighing whether to extend state pension-fund insurance to affected workers and whether the banking association can help place them in jobs at other banks. Representatives of several of the affected firms, including Itti SAECA and Kaitel S.R.L., told senators their priority was simply to be paid what they are owed, with one worker representative asking that pregnant and nursing employees be given particular consideration in any settlement. A draft bill addressing the payments is expected to be presented to the full Senate on Monday.

Depositors, regulators and what comes next

For ordinary account holders, Congress had already moved faster. On November 4, the Senate unanimously enacted a law allowing an advance payment of up to 40 times the minimum monthly wage per depositor, to be paid by electronic transfer or, for those without another bank account, in cash. Senator Dionisio Amarilla said roughly 1.4 million customers with accounts elsewhere would receive transfers automatically, while about 400,000 who banked only with Ueno would have new accounts opened for them in coordination with the Central Bank.

The regulatory fallout has also reached the Central Bank itself. On November 9, the Senate confirmed new leadership for the institution, approving Jorge Schreiner as its president and Fernando Rivarola as a board member. Rivarola told senators he would seek "as soon as possible" an orderly resolution for depositors, while lawmakers pressed for a review of why regulators had not caught the bank's deteriorating solvency sooner.

Peña's defense has argued the impeachment process was misapplied and that his resignation offer, submitted before the Senate vote, should have ended Congress's jurisdiction over the case; prosecutors have said he will remain in custody while the investigation continues. For the thousands of workers and millions of depositors still waiting on money, the more immediate test will come Monday, when the Senate is expected to take up the labor committee's proposed bill, and in the coming days, as the Central Bank's new leadership tries to show it can finish what its predecessors could not.