Paraguay’s President Santiago Peña resigned on Thursday, days after the collapse of a digital bank tied to his own business past froze the savings of three million people and turned his own party against him.
Key Points
- Peña announced his resignation in a video posted on X, saying he was stepping down to preserve the country’s stability and democratic institutions.
- Minutes later, the lower house of Congress voted 78-0 to impeach him, and Vice President Pedro Alliana is set to take over.
- The central bank seized Ueno Bank on Tuesday after its solvency ratio fell to 5.56%, less than half the 12% legal minimum.
- About three million customers — more than 60% of Paraguay’s adults — cannot access their accounts.
The crisis unfolded with startling speed. Ueno Bank had grown in less than five years from an obscure finance company into a household name, claiming more than 60% of Paraguay‘s adults as customers. But on Monday, regulators investigating the bank’s loans to companies linked to its owners found poorly documented lending and expenses wrongly counted as assets. Once the books were corrected, the bank‘s capital — the cushion banks must keep to absorb losses — had fallen to less than half the legal minimum.
The central bank seized the lender on Tuesday and announced plans to move customers’ accounts, along with whatever assets still hold value, to other banks before liquidating what remains. Ueno’s app, cards and transfers went dark, its branches locked their doors, and desperate depositors lined up outside with no way to cash out their savings.
A president caught by his own connections
Peña’s downfall was hastened by his own history with the bank. He had been a business partner of Grupo Vázquez, the conglomerate that controls Ueno Bank, until March 2025, according to the Associated Press. He also appointed Carlos Carvallo, the former president of Financiera Ueno, the bank’s predecessor, to run the central bank.
Lawmakers accused Peña of conflicts of interest, misuse of pension funds and institutional cover-ups linked to the collapse. Ueno held roughly $850 million in public funds, about a quarter of its total deposits, including money from the state pension and health fund and the operators of Paraguay’s giant hydroelectric dams. Authorities have detained eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale.
Protesters clashed with riot police in Asunción for a third day as lawmakers debated impeachment, and Peña lost the support of his own long-ruling Colorado Party. The guarani currency weakened past 6,500 per dollar before closing at 6,490, down nearly 5% on the day.
What happens next
Congressional leaders were expected to accept Peña’s resignation later on Thursday, clearing the way for Vice President Pedro Alliana to be sworn in without waiting for a Senate trial. Peña, a 47-year-old former International Monetary Fund economist elected in April 2023, was serving a five-year term scheduled to end in 2028. He had been welcomed in Washington just weeks ago as a key ally of President Donald Trump. He has said he will appear before the Senate to exercise his right to a defence. For millions of Paraguayans, the more urgent question is when — and how much — of their savings they will get back.
Sources: Reuters via GMA News — https://www.gmanetwork.com/news/topstories/world/1008472/paraguay-president-pe-a-resigns-under-mounting-pressure-from-bank-collapse/story/ ; AP via Gulf News — https://gulfnews.com/world/americas/paraguay-faces-crisis-over-bank-collapse-president-santiago-pena-resigns-1.500737533