Paraguay president resigns amid fallout from bank collapse

REUTERS/CESAR OLMEDO/FILE PHOTO Paraguay’s President Santiago Peña speaks during an interview with Reuters, in Asuncion, Paraguay, in August 2024. Peña resigned today following the collapse of a prominent digital lender to which he had former business links, putting him under intense pressure as nearly half the population was left without access to their bank accounts.

ASUNCION >> Paraguayan President Santiago Peña resigned today following the collapse of a prominent digital lender to which he had former business links, putting him under intense pressure as nearly half the population was left without access to their bank accounts. He was resigning “with the stability of our country, social peace, and the need to preserve our democratic institutions in mind,” Peña said in a recorded video address today.

The fallout from the collapse of the bank, called ueno, forced the resignation on Tuesday of Paraguay’s central bank chief and resulted in the detention of eight ueno executives. The crisis has undermined Paraguay’s hard-won reputation as a stable destination for foreign investment, especially from neighboring Brazil.

The opposition had called an extraordinary session for today to begin the process of filing an impeachment motion in Congress, as protesters demanded Peña’s resignation. Peña, an ally of US President Donald Trump, had also lost backing from members of his own conservative party. His decision to step down must be ratified by the senate, which lawmakers said would likely move quickly in order to ensure a swift transition.

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By clicking to sign up, you agree to Star-Advertiser's and Google's Terms of Service and Privacy Policy . This form is protected by reCAPTCHA. Congress will meet at 2 pm local time to officially receive the resignation, said a Senate spokesperson.

Vice President Pedro Alliana is expected to be sworn in around 3:30 pm local time. Lawmakers had accused Peña of conflicts of interest, misuse of pension funds and institutional cover-ups linked to the collapse of ueno, which had grown quickly from a niche fintech player into a mid-tier bank administering close to $850 million in public funds.

“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfill its purpose, and that public funds – as well as the resources that belong to all Paraguayans – be protected,” Peña said in his address. Paraguay’s central bank intervened in ueno after determining that it had breached minimum solvency requirements, setting off a crisis that has left the company’s roughly 3 million customers, in a country of 6.5 million people, unable to access accounts.

Ueno has made no public statement on the issue. Peña, an economist who was elected in 2023, has faced intense political scrutiny because of his past business ties to the group that controls the collapsed bank. Peña was a shareholder of Grupo Vázquez, the group that owned the bank until March 2025.

Peña has repeatedly rejected suggestions of improper ties. He has described the controversy as the political escalation of what began as a technical and regulatory issue and has argued that any wrongdoing should be addressed through the courts. In a note to clients, JPMorgan said the ueno developments had “rapidly acquired a political dimension,” adding that risks to the wider financial system would hinge on “the speed and transparency” of authorities’ response.

Prosecutors issued arrest warrants for the eight ueno executives on Tuesday and they later turned themselves in. Courts ordered their assets frozen as the investigation widened, and some of the executives were subsequently placed under house arrest. Additional reporting by Natalia Siniawski and Aida Pelaez-Fernandez.