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Paraguay President Resigns as Bank Collapse Triggers Impeachment, Political Crisis
Paraguay President Resigns as Bank Collapse Triggers Impeachment, Political Crisis
President Santiago Peña resigns amid mounting pressure over the collapse of Ueno Bank, a major digital lender with which he previously had business ties.
Paraguay’s lower house votes 78-0 to impeach him shortly after his resignation announcement, forwarding the case to the Senate.
The bank’s collapse leaves about three million customers unable to access their accounts, with approximately $850 million in public funds exposed.
Eight senior bank executives are detained and 27 people charged as protests, allegations of financial misconduct and questions over regulatory oversight deepen the crisis.
November 05, () – Paraguay has been plunged into a major political and financial crisis after President Santiago Peña resigned on Thursday, following mounting public anger over the collapse of Ueno Bank, a major digital lender with which he previously had business ties.
Peña’s resignation came as opposition lawmakers, protesters and influential members of his ruling Colorado Party intensified efforts to remove him over allegations of conflicts of interest, financial mismanagement and regulatory failures surrounding the troubled bank.
In a dramatic development, the country’s lower house voted 78-0 to approve impeachment charges against the president shortly after he announced his resignation. The case was subsequently forwarded to the Senate, which is constitutionally empowered to determine whether to convict and remove him.
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The lawmakers proceeded with the impeachment vote despite Peña’s resignation, while the Senate was also expected to consider the formal acceptance of his departure.
The crisis has exposed the vulnerability of millions of bank customers, with approximately three million people unable to access their accounts following the Central Bank of Paraguay’s intervention in Ueno Bank.
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Announcing his resignation in a video message posted on X, Peña said his decision was guided by the need to protect national stability and democratic institutions.
“I have decided to submit my resignation from the Presidency of the Republic. I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions,” he said.
The president also apologised to Paraguayans over the crisis but stopped short of accepting responsibility for the bank’s collapse.
“I also want to apologise to the people. If at any moment I have failed them, it was never my intention to betray the trust they placed in me,” he said.
Peña said his priority was ensuring that depositors recovered their savings, urging authorities to guarantee repayment and protect public resources.
He expressed the hope that the Deposit Guarantee Fund would fulfil its statutory purpose and that funds belonging to government institutions and ordinary citizens would be protected.
His resignation followed the withdrawal of support by influential figures within the ruling Colorado Party, including former president and party leader Horacio Cartes, who had previously been a major political ally.
The party’s congressional leadership also withdrew support, leaving Peña increasingly isolated as impeachment proceedings gathered momentum.
Vice President Pedro Alliana is expected to succeed Peña and complete the presidential term, which runs until August 2028, subject to the constitutional succession process and formal acceptance of the resignation.
Ueno Bank Collapse Sparks National Crisis
At the centre of the political upheaval is Ueno Bank, a fast-growing digital financial institution that expanded rapidly from a relatively obscure finance company into one of Paraguay’s major lenders.
The bank secured its banking licence in 2023 and attracted millions of customers through aggressive marketing, digital banking services and an expanding network of branches.
It reportedly served approximately three million customers, representing more than 60 per cent of Paraguay’s adult population, before the Central Bank intervened.
The intervention followed findings that Ueno had breached minimum solvency requirements, with regulators uncovering serious weaknesses in its financial position, including excessive lending to companies linked to its owners.
According to the Associated Press, investigators identified risky insider lending, inadequate documentation, and expenses that had been improperly recorded as assets.
Following adjustments to its financial statements, the bank’s capital fell to less than half the legally required minimum, prompting the central bank to take control of the institution and initiate resolution proceedings.
The intervention left customers unable to access their savings through the bank’s branches, mobile application, cards, and electronic transfer services.
The financial institution also administered approximately $850 million in public funds, including money belonging to government institutions and pension funds. The Associated Press reported that about $380 million was held by the country’s state pension and health fund.
The collapse has therefore extended beyond a banking dispute, threatening household savings, pension payments, workers’ salaries and confidence in Paraguay’s financial system.
Peña’s previous business relationship with the bank’s owners became a major source of controversy as the crisis intensified.
The president had held shares in Grupo Vázquez, the conglomerate that controlled Ueno Bank, before severing his business ties in March 2025.
His association with the group raised questions about possible conflicts of interest, particularly over the government’s handling of the bank’s regulatory problems and the protection of public funds deposited with the institution.
Further controversy surrounded the appointment of Carlos Carvallo, a former head of Financiera Ueno, the financial institution that preceded Ueno Bank, as president of the Central Bank.
Carvallo’s previous connection to the lender attracted criticism from lawmakers and financial observers, given the central bank’s responsibility for supervising the institution.
He resigned on Tuesday at Peña’s request as the crisis deepened.
Peña had previously defended the bank’s supervision and insisted that the problems at Ueno did not represent a broader weakness in the country’s banking sector.
“The financial system is sound. It has institutions and protective mechanisms in place,” he said in a video message on Wednesday.
He also maintained that the crisis was isolated and that those responsible for any wrongdoing must face prosecution.
“Those responsible will have to answer to the courts, without exceptions or privileges,” he said.
However, the president’s assurances failed to calm public anger as the bank’s intervention triggered protests and intensified calls for accountability.
Peña has denied wrongdoing relating to his former business interests in Grupo Vázquez.
Arrests, Protests Deepen Political Crisis
The financial crisis has triggered criminal investigations, with prosecutors moving against senior executives and individuals connected to Ueno Bank.
Eight senior bank executives were detained as authorities investigated alleged financial irregularities, while prosecutors reportedly charged 27 people, including bank officials and business associates, with offences including breach of trust and attempted fraud.
Among those detained were the bank’s founder, Miguel Vázquez, and its president, Juan Manuel Gustale.
Investigators are examining suspected irregular lending practices, transactions involving companies linked to the bank’s owners and possible attempts to conceal the institution’s deteriorating financial position.
Authorities also ordered the freezing of assets belonging to individuals under investigation.
Lawyers representing some of the detained executives said they needed time to examine the allegations before making substantive comments.
Meanwhile, the Central Bank appointed Pedro Acosta Bernal as interim head following Carvallo’s resignation.
The collapse of Ueno Bank triggered demonstrations in Asunción, Paraguay’s capital, as depositors, pensioners, students, workers and other affected citizens demanded access to their money and accountability from the government.
Protesters marched towards government buildings and Congress, accusing the administration of failing to protect their savings and allowing political connections to undermine financial oversight.
The demonstrations turned violent as riot police deployed pepper spray and rubber pellets to disperse protesters attempting to advance towards government buildings.
Some demonstrators accused the ruling Colorado Party of presiding over decades of corruption and financial mismanagement.
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