Paraguay bank collapse strands nearly 3 million customers, impeachment bid cites president's stake in Ueno holding company and his central bank pick, judge accepts charges against 27 people

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Paraguay's central bank pulled the plug on Ueno Bank on Tuesday, freezing the accounts of nearly 3 million customers and setting off two days of street protests, an impeachment bid against President Santiago Peña, and criminal charges against 27 people by Wednesday evening.

The resolution process exposed a shortfall exceeding 1.6 trillion guaraníes — about 260 million dollars — in funds set aside to cover potential losses, ABC Color reported. The bank itself acknowledged it could not replenish 70 million dollars in required reserves. A criminal complaint filed by the central bank alleges Ueno made large unsecured loans to companies within its own corporate group, used new borrowing to cover repeated overdrafts, and staged a simulated 74.4-million-dollar sale of loans to conceal the exposure.

The opposition's impeachment request, backed by 35 signatures, cites two details: Peña's stake in Ueno's holding company when he took office, and his appointment of former Ueno chief Carlos Carvallo to head the central bank — the institution that then had to seize his old employer. Carvallo resigned Tuesday. Prosecutors have requested pretrial detention for principal shareholder Miguel Vázquez and house arrest for seven other executives, with hearings scheduled Thursday.

The losses land on depositors, among them the state. The Social Security Institute has roughly 355 million dollars sitting in Ueno — 9 percent of its investment portfolio — though its financial manager Gladys Vera says payments can still be met. Police met Wednesday's crowds in central Asunción with water cannon and tear gas after what they called an attempt to breach a barrier near Congress. The lower house convenes Thursday morning to consider the request, while the presidency denies rumours that Peña is resigning and says he remains focused on responding to affected depositors.

The man who regulated the bank was its former chief, and the man who owned part of its holding company signed the laws that let it run.