Santiago Peña, Paraguay’s president, has announced he will step down after the collapse of a digital bank linked to him froze the savings of about three million people. Santiago Peña resigns as lawmakers push ahead with impeachment, and the Senate was due to begin his trial on Friday. As of Friday afternoon PKT (early morning in Paraguay), Congress had not accepted the resignation, so he remains provisionally in office.
Why Santiago Peña resigns now
The crisis centres on Ueno Bank. Earlier this week, Paraguay’s central bank placed the lender into a resolution process over insolvency. As a result, all its operations were frozen.
Ueno says it has about three million customers. That is roughly 60% of the country’s adult population, according to the BBC. The bank also held pensions and other public money. The Guardian reported that it managed $800m to $850m of deposits belonging to state and pension bodies.
Hundreds of thousands of families suddenly could not reach their money for food and daily costs. Bank executives were arrested, and large protests followed. Earlier demonstrations clashed with police, who used tear gas and water cannon, AFP reported.
Peña’s link to the bank
Peña, 47, is an economist and former finance minister. He took office in August 2023 for a term running until 2028. Until early last year, he was a shareholder in the group that controlled Ueno.
Lawmakers accuse him of misconduct and a conflict of interest. In particular, critics question how public and pension funds came to be placed with the bank. Peña denies any wrongdoing. He has said he made only an “investment” and later sold all his shares.
In a video on social media, he apologised. “It was never my intention to betray the trust you placed in me,” he said. He added that his priority was the “peace of mind” of people who had trusted their savings to the financial system.
Impeachment moves forward anyway
Under Paraguay’s rules, Congress must approve a president’s resignation. However, a special joint session on Thursday failed to reach a quorum. Instead, lawmakers chose to continue with impeachment.
About an hour after Peña’s video, the lower house voted unanimously to approve the impeachment motion. The case now goes to the Senate. Ruling party senator Derlis Maidana said the aim was to finish the trial on Friday to “reassure the public”.
Peña said he would appear to “exercise my right to a defence”. If the Senate convicts him, he would be stripped of his Senate seat and the parliamentary immunity that comes with it, The Guardian reported. That would leave him open to criminal cases in the ordinary courts.
Allies turn against him
Pressure grew quickly inside his own Colorado Party. Former president Horacio Cartes, once a close ally, publicly backed impeachment on Thursday. “We will not stand on the side of the theft of public, private and pensioners’ funds,” he wrote.
Opposition senator Rafael Filizzola went further. He called the case “the biggest fraud carried out from political power in the democratic era”.
Other officials have also gone. Central bank chief Carlos Carvallo resigned at Peña’s request, and a new governor has been named. In addition, Interior Minister Enrique Riera stepped down on Thursday.
Who could take over
If Peña leaves office, Vice President Pedro Alliana is next in line. Notably, the Colorado Party dropped impeachment steps against Alliana, the BBC said. Even so, Alliana also faces suspicion over the Ueno affair, which he denies.
What it means for depositors
Congress has approved a process to repay depositors. Peña had also set a five-day deadline for the return of funds. Still, many families remain without access to their money. One mother told AFP that a home loan from Ueno was never paid out, leaving her family without housing.
The crisis also matters beyond Paraguay. Peña has been a close regional ally of US President Donald Trump. As of Friday morning, neither Trump nor Secretary of State Marco Rubio had commented publicly. For now, the outcome of the Senate trial will decide who leads the country.
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