Paraguay President Santiago Peña Resigns as Ueno Bank Collapse Sparks Impeachment

ASUNCIÓN — Paraguay's President Santiago Peña offered his resignation on Thursday after the sudden collapse of Ueno Bank, a digital lender with close ties to him, froze the savings of nearly three million people and plunged the country into its gravest political crisis in years. Within minutes, the lower house of Congress voted 78-0 to impeach him — and then refused to accept his resignation, pressing ahead with a Senate trial that could remove him from office instead.

Peña, a 47-year-old former International Monetary Fund economist who took office in 2023, announced his decision in a video message posted on social media, saying he was acting to protect Paraguay's stability and its democratic institutions. "I have made the decision to submit my resignation as president of the republic," he said. "I want to apologize to the people if I have failed them at any point. It was never my intention to betray the trust that they placed in me."

The crisis erupted on Tuesday, when Paraguay's central bank seized Ueno Bank after finding that its solvency ratio had fallen below half of the legally required minimum. The bank's app, cards and transfers went dark immediately, leaving depositors queuing outside locked branches and sparking street demonstrations in the capital. Ueno is Paraguay's largest digital bank and its fifth-largest bank by assets, and the collapse froze about $850 million in deposits.

A bank failure that reached the presidency

Central bank inspectors found that corrections to Ueno's accounts exposed poorly documented lending to companies linked to the bank's owners, as well as expenses wrongly counted as assets. Once those adjustments were made, the lender's capital came to less than half of the legal minimum, and regulators moved to place it under administration to protect depositors and preserve the stability of the financial system.

Peña's own connection to the bank is at the centre of the scandal. He indirectly held a large stake in Ueno during its rapid expansion in recent years, a period in which the lender won new business with government entities, including managing pension money. Peña says he cut ties with the bank and with Grupo Vázquez, the conglomerate that controls it, and held his shares until last year. Opposition lawmakers filed impeachment articles on Wednesday, accusing him of a conflict of interest, misuse of pension funds and a cover-up.

The scale of the failure is what turned a banking scandal into a national emergency. Ueno counted 2.94 million customers, according to the central bank — more than 60 percent of Paraguayan adults, according to The Associated Press. For a country of just over six million people, the lender was where a huge share of the population kept its money, received wages and paid bills. Brazil's presidential runoff had already put the region's politics in flux, but the Paraguayan crisis is of a different order: a sitting president brought down by the bank his own customers trusted.

Resignation refused, impeachment advances

Peña submitted his resignation while lawmakers were debating the charges brought against him by 35 opposition lawmakers and dissidents from his own ruling Colorado Party. The lower house voted unanimously to send the impeachment case to the Senate, accusing him of "serious and systematic dereliction of duty" in connection with his dealings with the bank.

A joint session of Congress convened to consider the resignation then failed to reach a quorum after lawmakers from Peña's Colorado Party walked out, and the resignation was never accepted. Opposition senators argued against accepting it in part because a resignation would preserve Peña's eligibility to become a senator for life, with legal protections that could shield him from prosecution. Under Paraguay's constitution, former democratically elected presidents automatically become senators for life unless they have been found guilty in impeachment proceedings.

The Senate opened impeachment proceedings on Thursday night and summoned Peña to present his defence at 10 a.m. local time on Friday. Removing him requires 30 of the Senate's 45 members, and ruling-party senators have said they aim to conclude the trial on Friday to reassure the public. Peña has said he will attend and defend himself. "I will do so with arguments and evidence, with respect for the Constitution and the institutions of the Republic," he said, adding that he would fully cooperate with the competent institutions.

Criminal cases open on three fronts

The impeachment is only one track. Attorney General Emiliano Rolón Fernández ordered three criminal investigations into the crisis on Thursday, examining the supervision and resolution of Ueno Bank, the placement of public funds in the lender, and the conduct of current and former government officials. A complaint against Peña originally filed in October 2025 has been expanded to include allegations linked to the bank's oversight and resolution.

The cases against the bank's leadership are further along. Prosecutors have charged 27 bank officials and business associates with offences including breach of trust and attempted fraud, and a judge ordered six Ueno executives jailed pending trial, among them founder Federico Miguel Vázquez and bank president Juan Manuel Gustale. Eight senior executives have been detained, and authorities have arrested many executives tied to the bank. The charges are allegations, not findings, and Gustale's lawyer disputes the case against his client.

Streets, savers and the deposit guarantee

Hundreds of retirees, depositors, students and workers marched in Asunción on Wednesday, and riot police used pepper spray and rubber pellets against protesters, according to The Associated Press. Demonstrations continued after the closure left depositors unable to reach their money, and thousands of protesters took to the streets of the capital as the political crisis deepened.

The central bank has begun arrangements to return depositors' money, starting with customers holding deposits of up to 10 million guaraníes. How much of the frozen $850 million savers will recover — and how quickly — remains unanswered while the lender is wound down.

What happens next

If Peña is removed, Vice President Pedro Alliana, 52, from the same conservative Colorado Party, would serve out the remainder of the term until August 2028. Alliana's own position was tested on Thursday, when deputies voted 48 to 30 against an impeachment request aimed at him, clearing the way for him to take over. Senator Esperanza Martínez, the only leftist legislator in parliament, has filed a formal motion to prevent Peña from leaving the country.

The crisis is a stunning reversal for a leader who had enjoyed the backing of the country's most powerful politicians and was welcomed in Washington just weeks ago as a key ally of the Trump administration. It has also turned Peña's long-ruling Colorado Party against him, with ruling-party dissidents joining the opposition in bringing the impeachment charges. News Plus Globe's world news coverage will follow the Senate trial as it unfolds.

For now, Peña remains formally in office while the Senate trial runs its course. Whether he leaves through resignation, removal or acquittal, the Ueno collapse has already put a president who won office as an economist on trial over the bank that held his country's savings. Live coverage of the trial and its aftermath will continue here, with full reporting as the verdict and the succession are decided.