Paraguayan President Santiago Peña resigns after Ueno Bank collapse

Paraguayan President Santiago Peña resigned Thursday after the central bank seized Ueno Bank, a digital lender tied to his government, amid a solvency crisis that froze millions of people's savings.

Peña announced his resignation in a video posted to X, saying he was stepping down to preserve the country's stability and democratic institutions while lawmakers gathered inside the Legislative Palace debated his impeachment.

"I have made the decision to submit my resignation as president of the republic," said Peña, a one-time investor in a company related to Ueno Bank. "I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions."

Under Paraguay's Constitution, Congress must accept or reject the president's resignation; Vice President Pedro Alliana is in line to succeed him.

Peña said his priority was ensuring depositors recovered their savings. "Behind every deposit are years of hard work, sacrifice and family dreams," he said.

The Senate ousted President Santiago Peña on Friday over the collapse of a major bank tied to his government. In a unanimous vote, the 44 senators present voted to remove Peña for misconduct in office, clearing the way for Vice President Pedro Alliana to succeed him.

His removal also bars him from the lifetime Senate seat granted to elected former presidents under Paraguay's Constitution, denying him the parliamentary immunity that would accompany it.

Paraguayan prosecutors on Friday ordered the arrest of ousted President Santiago Peña and former central bank chief Carlos Carvallo in a criminal investigation into alleged breach of trust and other offenses tied to the collapse of Ueno Bank.

The order was issued soon after the Senate removed Peña from office. In a letter to the national police commander, prosecutors asked police to carry out the detention order. Under it, Peña is to be held at his home until he is brought before prosecutors in the economic crimes and anti-corruption unit. Carvallo is to be held at a police facility.

Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky insider lending. Peña has denied wrongdoing.

Prosecutors have charged 27 people, including Ueno's controlling shareholder, Miguel Vázquez, with crimes including breach of trust and attempted fraud, and six bank directors are in pretrial detention. Authorities have seized nine luxury cars from Vázquez's home, along with a yacht and small planes linked to him, and searched executives' homes in a gated community outside the capital.

Ueno's implosion has plunged Paraguay into its deepest political crisis in more than a decade. Regulators seized the bank before dawn Tuesday. By Thursday afternoon, Peña had offered to resign as his conservative Colorado party turned on him, led by former President Horacio Cartes, the party chief and Peña's longtime mentor. By Friday, his interior minister, chief of staff, legal adviser and political adviser had all quit.

Ueno rose from obscurity to become Paraguay's fifth-largest bank by deposits in just a few years, with more than $800 million in public money turbocharging its expansion. It signed up more than two-thirds of the country's adults.

Overnight, Ueno customers could no longer withdraw cash, access their savings or use their cards to buy anything. Some depositors began recovering their money Thursday, starting with those holding up to 10 million guaraníes (about $1,600). Deposits are insured up to about $37,000, which the central bank says covers nearly all of Ueno's customers. It calls the collapse an isolated case and insists the broader financial system is safe.

Thousands of protesters demanding their frozen savings back and accountability for Ueno's failure have clashed with police firing rubber bullets and pepper spray this week. Paraguay's largest teachers' union, which has more than 40,000 members, plans to begin an indefinite national strike Monday to press for protection of public pension funds.

Sources

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