Paraguay's Santiago Peña Resigns After Ueno Bank Collapse Freezes Millions of Accounts

Paraguay’s President Santiago Peña resigned Thursday, Nov. 5, amid a banking and political crisis sparked by the collapse of Ueno Bank, a fast-growing digital lender that froze accounts for roughly three million customers — about 60% of the country’s adult population, according to the BBC, The Guardian and the Los Angeles Times (reporting with the Associated Press).

“I want to apologise to the people if at any point I failed,” Peña said in a video message posted on social media, as quoted by the BBC. “It was never my intention to betray the trust you placed in me.” He said he was stepping down to protect stability, social peace and democratic institutions.

Minutes after that announcement, Paraguay’s lower house voted 78-0 to impeach him, the Los Angeles Times/AP reported, sending charges to the Senate. Vice President Pedro Alliana was expected to assume the presidency and serve out the term through August 2028.

This article summarizes news reporting and is not financial advice.

What happened to Ueno Bank?

Ueno began as a finance company decades ago, was bought by conglomerate Grupo Vázquez in 2021, and won authorization under Peña’s government to operate as a digital bank at the end of 2023, The Guardian reported. It expanded rapidly with cash-back grocery offers, dozens of locations and sponsorship of Paraguay’s national soccer team.

Last Monday, the central bank ordered Ueno into resolution over insolvency, freezing deposits. The Los Angeles Times/AP said regulators found risky insider loans, poorly documented lending and expenses wrongly counted as assets. Once books were corrected, capital fell to less than half the legal minimum. The central bank seized the lender and began plans to move accounts and repay depositors.

Ueno held about $800 million to $850 million in deposits from state and pension entities, The Guardian and LA Times/AP reported — roughly a quarter of its total deposits, including money tied to retirement and health funds and hydroelectric operators. Apps, cards and transfers went dark. Lines formed outside locked branches. Other banks’ mobile apps crashed Wednesday as people rushed to open new accounts.

Authorities said they had begun repaying depositors and opened new accounts elsewhere for about 280,000 customers who banked only with Ueno, according to the LA Times/AP. Interim central bank president Pedro Acosta Bernal insisted the broader banking system was sound after Carlos Carvallo — whom Peña had appointed and who previously led Financiera Ueno — resigned.

Eight senior Ueno executives, including founder Miguel Vázquez and bank President Juan Manuel Gustale, were detained, and prosecutors charged 27 bank officials and associates with offenses including breach of trust and attempted fraud, the LA Times/AP reported. Lawyers for several detainees said they needed time to review the allegations.

Why was Peña under pressure?

Peña held a stake in a company related to Ueno’s holding group until early last year (BBC and Guardian). Critics alleged conflicts of interest as public and pension money flowed into the bank. Peña said he had made an investment as an economist and disposed of his shares, dismissing media questions as a campaign to weaken his government, The Guardian reported.

Protesters filled Asunción for days, demanding their money and Peña’s ouster. The LA Times/AP quoted demonstrators calling him “the enemy of savers.” Former president Horacio Cartes, once an ally, endorsed impeachment Wednesday. Opposition and Colorado Party lawmakers filed an impeachment motion holding Peña responsible for the collapse.

Opposition senator Rafael Filizzola called the episode “the biggest fraud carried out from political power in the democratic era,” The Guardian reported.

Who takes over?

Vice President Pedro Alliana automatically assumes the presidency to complete the term until August 2028, The Guardian and LA Times/AP said. Congress was expected to formally accept Peña’s resignation Thursday afternoon and swear Alliana in shortly after. If the Senate convicts on impeachment even after resignation, Peña could lose a Senate seat and parliamentary immunity, The Guardian noted.

Peña, a former finance minister elected in 2023 for the Colorado Party, had been a regional ally of U.S. President Donald Trump. Neither Trump nor Secretary of State Marco Rubio had publicly commented on the resignation at the time of The Guardian’s report.

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