Paraguay's Peña resigns and is impeached minutes later after Ueno Bank collapse

Paraguayan President Santiago Peña announced his resignation on Thursday after the collapse of Ueno Bank, a digital lender tied to his government, triggered nationwide protests, froze millions of people's savings and cost him the backing of his own Colorado Party. Minutes later, the lower house of Congress voted 78-0 to impeach him and sent the charges to the Senate.

Congressional leaders were expected to accept the resignation later on Thursday, clearing the way for Vice President Pedro Alliana to be sworn in without waiting for a Senate trial. Opposition senators were still demanding a trial, arguing that letting Peña resign would preserve his eligibility to become a senator for life, with legal protections that could prevent his prosecution.

In a video posted to X, Peña said he was stepping down for the sake of "the stability of our country, social peace and the need to preserve our democratic institutions." He apologised to Paraguayans "if I have failed them at any point," saying it was never his intention to betray their trust, but he stopped short of accepting responsibility for the turmoil.

How the bank collapsed

Ueno grew from an obscure finance company into a household name in less than five years, claiming more than 60% of Paraguay's adults as customers. As of last month it reported holding roughly $800 million in public deposits — about a quarter of its total — including money from the state pension and health fund and the operators of Paraguay's giant hydroelectric dams.

Central bank inspectors found a pattern of risky lending to insiders as early as June, according to the newspaper ABC Color: large sums extended to companies tied to Ueno's owners, beyond what the law allows and without enough collateral. Regulators moved this week after finding poorly documented loans and expenses the bank had wrongly counted as assets. Once corrected, Ueno's capital fell to less than half the legal minimum, and the central bank seized the lender on Tuesday.

Anger, arrests and a currency hit

Even Peña's mentor, former president and Colorado Party leader Horacio Cartes, backed impeachment, saying the party would not side with "the plundering of public and private funds and pensioners' money."

The guaraní fell nearly 4% against the U.S. dollar on Thursday, bringing its losses for the week to nearly 7%, according to central bank exchange-rate data.

A judge ordered six Ueno executives jailed pending trial, including founder Miguel Vázquez and bank President Juan Manuel Gustale, and placed two others under house arrest. Prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud. Gustale's lawyer argued that senior executives had relied on staff for lending decisions.

Under a law rushed through Congress on Wednesday, a state guarantee fund must repay stranded depositors within five business days, starting with small accounts of up to about $1,600. The fund insures up to about $36,000 per customer, which the central bank says will cover the full balances of an estimated 97% of clients. The Labor Ministry estimates the collapse has affected about 7,000 direct and indirect jobs at the bank and its related businesses.

Protesters outside the Labor Ministry demanded severance and unpaid wages, vowing to keep demonstrating. "Let the impeachment process take place and let him lose his immunity," said Adolfo Villalba, one of the protesters.

Source: NPR News.