Paraguay banking scandal triggers impeachment trial for President Peña

A banking scandal has plunged Paraguay into a government crisis, with President Santiago Peña facing an impeachment trial that was set to begin Friday. The proceedings stem from his ties to Ueno, a digital bank placed under central bank administration due to insufficient capital, leaving millions of customers unable to access their funds. Ueno, which grew rapidly since 2021 to hold accounts for roughly half of Paraguay's 6.4 million people, allegedly granted excessive loans to companies linked to its main shareholder, Grupo Vázquez. Peña, who sold his stake in the group by March 2025, denies conflicts of interest, while eight Ueno executives, including CEO Miguel Vázquez, remain in custody. The central bank plans to transfer Ueno customer accounts to other institutions, though the process has strained the banking system and caused outages elsewhere. Authorities insist the crisis is isolated, but the affair's impact on Paraguay's investment-grade reputation remains uncertain, with potential indirect risks for international bondholders.