Paraguay President Resigns as Ueno Bank Collapse Triggers Probe

Paraguay's political leadership plunged into crisis Thursday after President Santiago Peña resigned following the collapse of Ueno Bank, a major financial institution that had links to his business interests. The failure froze millions of customer accounts, prompting criminal investigations, congressional impeachment proceedings and public protests over inaccessible savings and pension payments.

The Central Bank of Paraguay intervened in Ueno earlier in the week after finding that its capital reserves had fallen far below legally required levels. According to the Washington Post, authorities said the institution lacked sufficient capital to absorb its losses and had violated restrictions on lending to related companies.

Ueno had approximately 2.9 million customers in a country of 6.1 million people, according to CNN. Its collapse also put hundreds of millions of dollars in public funds at risk, including money managed by the Social Security Institute (IPS).

Peña acknowledged previously holding a stake in a holding company that controlled Ueno until 2025, according to the Washington Post, but denied having direct connections to the bank itself.

Three criminal investigations ordered by Attorney General Emiliano Rolón Fernández will examine "the supervision and resolution of Ueno Bank SA, the placement of public funds in said entity and the actions of authorities from different State institutions."

Investigators are also examining the bank's regulatory oversight and the placement of government funds. Several Ueno executives have been detained, while authorities work to recover public money.

Peña announced his departure while lawmakers were considering impeachment charges submitted by 35 opposition lawmakers and members of his own political camp. The allegations included "serious and systematic dereliction of duty" in connection with his dealings with the financial institution.

In his resignation announcement, Peña described the decision as necessary to protect national stability and public institutions.

"I have made the decision to submit my resignation from the Presidency of the Republic. I do so with the stability of our country, social peace, and the need to preserve our public institutions in mind," Peña said in a social media statement, according to CNN.

He also cited the financial distress experienced by ordinary Paraguayans.

"who entrusted their savings to our financial system."

Peña described the departure as "one of the most difficult moments" of his life, according to the Washington Post.

He also expressed regret over his performance in office.

"I am convinced that no public office can take precedence over the well-being of Paraguay."

"I would like to apologize to the people if I have ever failed them."

Immediately after his announcement, Paraguay's Chamber of Deputies unanimously approved the initiation of impeachment proceedings. The Senate subsequently announced an impeachment trial, which began Thursday night and was expected to continue Friday.

Peña said he would participate and challenge the allegations through the country's constitutional institutions.

"I will do so with arguments and evidence, with respect for the Constitution and the institutions of the Republic," Peña said.

Senator Yolanda Paredes, an opponent of the president, called for his arrest rather than allowing him to leave office without facing legal consequences.

"This guy, Santiago Peña, needs to be jailed. An arrest warrant must be issued … pretrial detention, straight to jail," Paredes told reporters, according to CNN.

The resignation also created uncertainty over Peña's legal status. A joint congressional session considering whether to accept his resignation was adjourned after several lawmakers left during the vote. Accepting the resignation could have granted him immunity and additional legal protections, whereas impeachment would not.

Peña's right-wing Colorado Party holds majorities in both congressional chambers. Despite the political turmoil, his presidential office maintained that he would attend the proceedings. A spokesperson also rejected speculation that he had fled Paraguay, saying he remained in the capital.

The crisis has affected Paraguay's efforts to establish itself as a regional financial center following its achievement of investment-grade credit ratings from two major international agencies.

The Central Bank announced that payments under the deposit guarantee system would begin in stages for eligible Ueno customers, offering a partial response to widespread concerns over frozen savings.

Peña, who became president in August 2023 at age 44, previously served as finance minister from 2015 to 2017 under former president Horacio Cartes and worked as a Central Bank director. His administration also maintained close relations with US President Donald Trump's government.

The US State Department said Washington intended to maintain cooperation with Paraguay despite the political crisis.

"We remain committed to the enduring relationship between the American and Paraguayan people and look forward to continuing our close cooperation on shared priorities," a State Department spokesperson said.