Paraguay’s Peña resigns after bank collapse froze 3m deposits

Paraguay’s President Santiago Peña resigned on Thursday after the central bank ordered Ueno Bank into resolution over insolvency, freezing the deposits of 3 million customers. Lawmakers voted unanimously to open impeachment proceedings against him over the collapse of the country’s banking system.

What happened to Ueno Bank?

Paraguay’s central bank ordered Ueno Bank into resolution over insolvency last Monday, freezing deposits held by 3 million customers and leaving hundreds of thousands of families without access to money for food and basic daily expenses. Bank executives were arrested and large protests followed. Ueno had grown in a few years from an obscure digital bank into one of the country’s largest lenders, claiming about 60% of Paraguay’s adult population as customers.

Why was Peña accused of a conflict of interest?

Ueno Bank began as a finance company in the 1970s and was bought in 2021 by Grupo Vázquez, one of Paraguay’s largest business and industrial conglomerates. At the end of 2023, already under Peña’s administration, it received authorisation from the central bank to operate as a digital bank. It expanded rapidly, offering cash-back on groceries and sponsoring Paraguay’s national football team, and came to manage between $800m and $850m in deposits from state and pension entities, including retirement funds. Peña was a shareholder in the group that ran the bank until early last year; he said he had made an “investment”, had sold all his shares and dismissed coverage of the fund flows as a “false media campaign”. The use of state money has drawn scrutiny in other areas of Paraguayan policy, including investment and public spending on water and sanitation.

How did the impeachment move against Peña unfold?

Opposition lawmakers and members of Peña’s Colorado party filed an impeachment motion on Wednesday holding the president responsible for the collapse and alleging misconduct and a conflict of interest in dealings with the bank, as Congress moved to impeach him. Pressure increased on Thursday morning when former president Horacio Cartes, his former ally, backed the move: “We will not stand on the side of the theft of public, private and pensioners’ funds.” About an hour after Peña’s announcement, the lower house unanimously approved the motion, which now goes to the Senate. If approved, he would lose his Senate seat and parliamentary immunity. Opposition senator Rafael Filizzola called the case “the biggest fraud carried out from political power in the democratic era”.

What did Peña say?

In a video announcing his resignation, Peña said: “With my heart set on Paraguay and with the conviction that our republic must always come before any person or circumstance, I have decided to submit my resignation as president of the republic.” He added: “I also want to apologise to the people if at any point I failed them … My greatest wish is that the return of those funds is guaranteed.”

Who replaces Peña?

Peña’s resignation must in theory be accepted by Congress, in which case Vice-President Pedro Alliana would take over. Alliana is also suspected of involvement in the Ueno Bank scandal, which he denies, and it is still unclear who will replace Peña and when. Peña, a 47-year-old economist and former finance minister in office since August 2023 with a term to 2028, was a close ally of US President Donald Trump in the region. US Secretary of State Marco Rubio had repeatedly praised him as a “strategic partner”, and neither Rubio nor Trump had commented on the resignation.

Frequently asked questions

Why did Paraguay’s Santiago Peña resign?

Peña resigned on Thursday after the central bank ordered Ueno Bank into resolution over insolvency, freezing the deposits of 3 million customers and triggering protests and impeachment proceedings in Congress.

Who takes over from Santiago Peña?

Under the arrangement described, Congress must in theory accept the resignation, after which Vice-President Pedro Alliana would take over. Alliana denies involvement in the Ueno Bank case, and it is unclear when a transition would happen.

What happened to Ueno Bank depositors?

Paraguay’s central bank froze deposits belonging to 3 million customers when it ordered the bank into resolution over insolvency last Monday. Ueno managed between $800m and $850m in deposits from state and pension entities.

Did Peña have links to Ueno Bank?

Peña was a shareholder in the group that ran the bank until early last year. He said he had made an investment and had sold all his shares, and denied improper favouritism in directing state and pension funds to the bank.

With reporting from The Guardian.

Stock image, not from the events described. City Skyline — Joe deSousa / Wikimedia Commons (CC0 1.0)