Paraguay's president resigns as bank collapse engulfs the country
Seven Lights
Paraguay’s president, Santiago Pena, resigned Thursday after a banking crisis brought on by the collapse of Ueno Bank, a lender with ties to him, froze the savings of three million people and collapsed confidence in the country’s financial system.
Lawmakers voted unanimously the same day to open impeachment proceedings against the 47-year-old economist, alleging misconduct and a conflict of interest in dealings with the bank. The lower house approved the motion about an hour after Mr. Pena announced his resignation in a video address. The measure now goes to the senate.
“My greatest wish is that the return of those funds is guaranteed,” Mr. Pena said in the address, in which he said the republic “must always come before any person or circumstance.” He has denied any wrongdoing. Mr. Pena had held the presidency since August 2023, with a term running to 2028.
The crisis began Monday, when the central bank placed Ueno Bank into resolution over insolvency, freezing deposits that hundreds of thousands of families had counted on for food and daily expenses. Bank executives were arrested. Thousands of Paraguayans gathered outside Congress in protest, and the national football team’s players issued a letter Wednesday demanding a “forceful response” from the government and the justice system.
Ueno began as a finance company in the 1970s and was bought in 2021 by Grupo Vazquez, one of Paraguay’s largest business conglomerates. Late in 2023, already under Mr. Pena’s administration, it received central bank authorization to operate as a digital bank. It grew with striking speed, claiming about 60 per cent of Paraguay’s adults as customers, attracting depositors with cash-back offers on groceries and sponsoring the national team. It also came to manage between $800 million and $850 million in deposits from state and pension entities, including retirement funds.
Mr. Pena has acknowledged a shareholding stake in Ueno Holding, saying he had made a professional “investment” and had since sold all his shares. Opposition senator Rafael Filizzola called the affair “the biggest fraud carried out from political power in the democratic era.”
The resignation must in theory be accepted by Congress, in which case Vice-President Pedro Alliana would take over. Mr. Alliana is also suspected of involvement in the scandal, which he denies; he has distanced himself from Mr. Pena and paused his own presidential ambitions.