The collapse of one of Paraguay’s largest banks has triggered a financial and political crisis, with millions of customers fearing for their savings and opposition lawmakers seeking to impeach President Santiago Peña.

At the centre of the crisis is digital lender Ueno Bank, which has been placed into resolution proceedings by the central bank after its capital ratio fell below half the legally required minimum.

Opposition lawmakers in Congress are preparing impeachment proceedings against Peña over his previous business ties to Grupo Vázquez, the conglomerate that owned Ueno Bank.

Peña, meanwhile, called for the resignation of central bank chief Carlos Carvallo, who submitted his resignation amid accusations of a conflict of interest stemming from his previous senior role at Ueno.

The bank said it had around 2.8 million customers in the first quarter of this year, equivalent to roughly 60 per cent of Paraguay’s adult population.

Its accounts, which were also used to process pension payments, are now frozen.

The crisis has sparked street protests in the capital, Asunción.

Peña sought to reassure the public in a video message, pledging to introduce legislation “that will return to every saver what they are entitled to as quickly as possible.”