Paraguay President Santiago Peña Resigns as Ueno Bank Collapse Freezes Millions of Accounts

Paraguay’s President Santiago Peña announced his resignation on Thursday, bringing a sudden end to his presidency after the collapse of a digital bank with close ties to him left about three million customers locked out of their accounts.

Peña, 47, made the announcement in a pre-recorded video message, saying he was stepping down “with the stability of our country, social peace, and the need to preserve our democratic institutions in mind”. His resignation must still be accepted by Congress, though lawmakers said the Senate was expected to move quickly.

Vice President Pedro Alliana was expected to be sworn in as his successor on Thursday afternoon, to serve out Peña’s term to 2028. Paraguay’s presidents serve a single five-year term and cannot seek re-election.

The resignation came as lawmakers debated an impeachment motion against Peña, and after his own governing Colorado Party turned against him. Horacio Cartes, the former president and the party’s powerbroker, publicly backed his removal.

A bank collapse that froze half the country

The crisis began with Ueno Bank, a digital lender that grew rapidly from a niche fintech into one of Paraguay’s largest banks. It says it has about three million customers — roughly 60 per cent of the country’s adult population — in a nation of about 6.5 million people.

Paraguay’s central bank board voted unanimously late on Monday to place Ueno into resolution and take control of the institution. Regulators acted after accounting adjustments showed its solvency ratio had fallen to 5.56 per cent, against a legal minimum of 12 per cent, according to La Nación.

Customers have been unable to withdraw or transfer money since Tuesday. The bank also manages close to $850 million in public funds, including pension money — a scale that turned a banking failure into a national emergency.

Most depositors are protected by a central bank guarantee fund covering up to 228.3 million guaraníes — about $38,000 — per person, enough, by preliminary estimates, to cover about 97 per cent of them in full. Peña has promised emergency legislation to return savers’ money as quickly as possible.

The central bank’s criminal complaint alleges Ueno made large unsecured loans to companies inside its own group and used new borrowing to cover repeated overdrafts. Prosecutors ordered the arrest of eight people, the Associated Press reported, including Ueno president Juan Manuel Gustale and chief executive Federico Miguel Vázquez Villasanti, as part of an investigation into suspected breach of trust and other offences.

Peña’s ties to the bank

He was a business partner of Grupo Vázquez, the conglomerate that controls Ueno, until March 2025, and held shares in its holding company until that stake was cancelled that month, according to the Associated Press.

He also appointed Carlos Carvallo to run the central bank in 2023, after Carvallo had chaired Ueno’s predecessor until mid-2023. Carvallo resigned as central bank chief on Tuesday at Peña’s request, after pulling the plug on the bank he once ran.

Lawmakers accused Peña of conflicts of interest, misuse of pension funds and institutional cover-ups, and cited two loans he received from the bank. Thirty-five lawmakers in the 80-seat Chamber of Deputies signed the impeachment filing, which needed two-thirds majorities in both houses to remove him.

Peña, a former International Monetary Fund economist, was elected in April 2023 and took office that August, casting himself as a moderniser of the Colorado Party, which has governed Paraguay for all but five years since 1947.

Impeachment pressure and his own party’s turn

The collapse set off street protests in Asunción, where hundreds gathered near Congress and the presidential residence demanding their savings and Peña’s removal.

The crisis also forced Peña to cancel a trip to an Ibero-American summit in Madrid. On Wednesday he named a new central bank chief, Raúl Vera Bogado, subject to congressional approval.

The resignation is the latest upheaval in Latin America, where El Salvador’s troops launched their first ground offensive against Haiti’s gangs this week. It also comes in a week of high-profile political cases, including the sentencing of Hong Kong activist Joshua Wong to 10 years in prison.

What happens next

Reuters reported that Congress would meet at 2pm local time to receive the resignation formally, with Alliana expected to be sworn in at around 3:30pm. Alliana has himself faced scrutiny linked to the same events.

The immediate task for the new government will be restoring access to depositors’ money. The central bank has said the case is isolated, but the episode has badly damaged Paraguay’s reputation as a regional haven for investors.

Washington, meanwhile, is mediating Ukraine-Russia peace talks in Abu Dhabi next week. Peña had been an ally of US President Donald Trump.