Paraguayan President Santiago Peña Resigns Amid Banking Collapse and Impeachment Proceedings

Paraguayan President Santiago Peña resigned on Thursday amid a severe financial and political crisis triggered by the collapse of Ueno Bank. The central bank ordered the digital lender into resolution over insolvency on Monday, freezing the deposits of three million customers and leaving hundreds of thousands of families unable to access money for food and daily expenses. Following the collapse, authorities issued arrest warrants for eight top executives, and bank president Miguel Vázquez turned himself into police.

Protesters gathered outside Congress in Asuncion to demonstrate against the administration, with some burning an effigy depicting the president. Lawmakers subsequently voted unanimously to launch impeachment proceedings against Peña, alleging misconduct and conflicts of interest regarding his past ties to the bank. Peña announced his resignation in a video message, stating that the republic must come before any person or circumstance.

Regulators investigating Ueno Bank uncovered alleged excessive lending to companies linked to its controlling shareholder, Grupo Vázquez, alongside expenses incorrectly counted as assets. The digital lender had expanded rapidly under Peña's administration after receiving authorisation to operate as a digital bank at the end of 2023, eventually claiming to serve approximately 60 percent of Paraguay's adult population and sponsoring the national football team.

The institution managed between $800 million and $850 million in deposits from state entities and pension funds, including retirement funds and health funds. Critics raised concerns over potential conflicts of interest due to Peña's previous shareholding ties to Ueno Holding until early last year. Peña defended his past involvement as a personal investment and dismissed accusations of improper favouritism as a false media campaign, while maintaining that he had already disposed of his shares.

Political pressure intensified as opposition lawmakers and members of Peña's own Colorado party filed impeachment motions. Former president Horacio Cartes also endorsed the impeachment proceedings, stating that action was necessary to restore institutional order. Meanwhile, Paraguay's attorney general ordered three criminal investigations into the bank, examining its operations and the connections held by the former president.