Paraguay's president Santiago Peña resigns as Ueno Bank collapse freezes 3 million depositors

Paraguay's President Santiago Peña resigned on Thursday, announcing the decision in a video released as Congress debated his removal, days after the central bank ordered Ueno Bank into resolution over insolvency and froze the deposits of 3 million customers. Lawmakers voted unanimously to open impeachment proceedings over the collapse, which has left hundreds of thousands of families without money for food and basic daily expenses. Ueno's executives have been arrested, and thousands of protesters gathered outside Congress.

The bank's rise was nearly as fast as its fall. Ueno began as a finance company in the 1970s and was bought in 2021 by Grupo Vázquez, one of Paraguay's largest business conglomerates. At the end of 2023, already under Peña's administration, the central bank authorised it to operate as a digital bank. Ueno then pulled in customers with generous cash-back offers on groceries, sponsored the national football team and came to claim about 60 percent of Paraguay's adult population as customers. Alongside the retail deposits sat between 800 and 850 million dollars from state and pension entities, including retirement funds.

Peña's ties to the bank were not incidental. He was a shareholder in the group that ran it until early last year, well into a presidency that began in August 2023, and said that, as an economist, he had merely made an "investment" in the bank — one he had already disposed of. The impeachment proceedings allege misconduct and a conflict of interest in his dealings with the bank. When the local press pointed to possible improper favouritism in steering state and pension money toward Ueno, he called it a "false media campaign" aimed at weakening his government. In recent months he had reportedly been ignoring warnings from the central bank and the media about the bank's operations.

His support then gave way in two days. On Wednesday, opposition lawmakers and members of Peña's own Colorado party filed an impeachment motion holding the president responsible for the collapse. The players of the national football team Ueno sponsors published a letter demanding a "forceful response" from the government and the justice system. On Thursday morning, former president Horacio Cartes, once Peña's ally, endorsed the motion, writing that his party would not "stand on the side of the theft of public, private and pensioners' funds". As the debate began, Peña's video arrived, invoking "the stability of our country, social peace" and the conviction that the republic "must always come before any person or circumstance".

The central bank granted Ueno its digital licence at the end of 2023, while the sitting president was still a shareholder in the group that ran the bank.