Paraguay’s President Santiago Peña has announced his resignation amid a political crisis triggered by the collapse of Ueno Bank, a digital lender whose failure left millions of customers unable to access their accounts. The announcement came as opposition lawmakers accused the president of conflicts of interest and misconduct because of his previous financial connection to the company that owned the bank. However, Peña rejected suggestions of wrongdoing, while Paraguay’s Congress moved forward with proceedings to consider his impeachment.
In a video message shared on social media, Peña apologised to the people of Paraguay, saying he never intended to betray the public trust placed in him. He also explained that his decision to resign was intended to protect political stability, social peace and the country’s democratic institutions. His announcement followed growing public pressure after Ueno Bank entered an insolvency process, resulting in the suspension of its operations and restricting customers’ access to their money.
The political controversy is closely connected to Peña’s previous involvement with the company that owned Ueno Bank. The president had been a shareholder in the company until last year, prompting lawmakers to question whether his financial interests created a conflict of interest in relation to the institution. Opposition representatives accused him of misconduct and argued that his association with the bank required greater accountability. Peña, however, rejected allegations of impropriety and maintained that the public deserved access to the facts surrounding the crisis.
The situation intensified when Paraguay’s lower house of Congress voted in favour of pursuing an impeachment trial against the president. Although Peña announced his resignation, the country’s constitutional and parliamentary procedures require Congress to approve a presidential resignation. A special session convened on Thursday to address his announcement was adjourned, with lawmakers choosing to continue the impeachment process instead.
Peña subsequently confirmed through a post on X that he would appear before the Senate as part of the impeachment proceedings. He said he intended to exercise his right to a defence and provide the requested information, adding that citizens deserved to know the truth without cover-ups or anyone being placed above the law. According to Reuters, Congress scheduled another special session for Friday, when the president was expected to present his defence.
Meanwhile, the collapse of Ueno Bank has created significant concerns for Paraguay’s financial system because of the institution’s large customer base and its involvement in handling public funds. The digital lender reportedly served approximately three million customers, representing around 60% of Paraguay’s adult population. Its services also included holding pension payments and certain other public funds, making the suspension of its operations particularly disruptive for individuals who depended on the institution for access to their money.
Following the bank’s collapse earlier in the week, millions of customers found themselves unable to access their accounts. The Central Bank of Paraguay seized control of the digital lender as authorities responded to the situation. The failure triggered public demonstrations, with customers and protesters gathering near government buildings to demand accountability and the president’s removal from office. Images from Thursday showed clashes between police officers and protesters near Paraguay’s Congress building during demonstrations linked to the political crisis.
Authorities have also initiated measures to address the financial consequences of the collapse. A new president of the Central Bank of Paraguay has been appointed, while Congress has approved a process to facilitate payments to depositors affected by the bank’s failure. These steps are intended to address concerns among customers and restore confidence following the disruption to banking services.
The crisis has also raised questions about the risks associated with digital financial institutions when they become deeply integrated into everyday financial activities. Ueno Bank’s reported customer base and role in handling pension and public funds demonstrate how the failure of a digital lender can affect a substantial portion of a country’s population. Beyond the immediate banking disruption, the situation has placed financial oversight, depositor protection and institutional accountability at the centre of Paraguay’s political debate.
Peña won the presidential election in 2023 as the candidate of Paraguay’s ruling conservative Colorado Party, defeating a centre-left challenger. His announcement has created uncertainty over the country’s political leadership and the next steps in the constitutional process. Vice President Pedro Alliana is next in line for the presidency, although the Colorado Party has dropped impeachment proceedings against him.
The developments leave Paraguay facing two interconnected challenges: addressing the consequences of a major banking collapse and resolving the political uncertainty surrounding its president. The handling of depositor payments, the continuation of impeachment proceedings and Congress’s decision on Peña’s resignation will remain central to the country’s response to the crisis.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.