Paraguay President Santiago Pena impeached minutes after his resignation as Ueno bank collapse triggers nationwide protests

Paraguay's lower house voted unanimously on Thursday to impeach President Santiago Pena, shortly after he announced his resignation, as the collapse of a major digital bank linked to his government froze millions of people's savings, sparked widespread protests and triggered a political revolt within his own party. The 78-0 vote represented a major blow to Pena, with lawmakers from his long-ruling Colorado Party joining opposition members to support impeachment following three days of demonstrations in the capital, Asunción. The charges will now go to the Senate, where a two-thirds majority is necessary to convict the president and formally remove him from office.

Thousands of people continued protesting for a third consecutive day, demanding the return of their savings, salaries and pensions trapped following the collapse of Ueno Bank, a major digital lender. Pena, a close ally of US President Donald Trump, announced his resignation in a video posted on X while lawmakers were debating his impeachment. He said he was stepping down in the interest of the stability of our country, social peace and the need to preserve our democratic institutions.

Although the president expressed regret, he did not accept responsibility for the banking crisis that has pushed Paraguay, a South American country long regarded as a stable destination for foreign investors, into financial and political uncertainty. "I also want to apologize to the people if I have failed them at any point," he said. “It was never my intention to betray the trust they placed in me.” The developments paved the way for a transfer of power later on Thursday. Congress was expected to formally accept Pena's resignation at 5 pm, allowing Vice President Pedro Alliana to take the presidential oath an hour later. Alliana would complete Pena's term, which runs until August 2028, while lawmakers are expected to select a new vice president.

From prominent lender to government seizure

Ueno Bank rose from an relatively unknown finance company to a household name in less than five years, claiming more than 60% of Paraguay's adult population as customers. Its collapse has left customers struggling to recover their savings and government pensions. Around 7,000 employees affected by the bank's closure are also facing unpaid wages. Questions have emerged over how a financial institution connected to the president, who held a stake in Ueno's holding company until last year, managed to expand so quickly despite repeated concerns about its lending practices.

The crisis has highlighted the close relationship between Pena's long-governing Colorado Party, financial regulators and the country's business elite. This has remained a concern even as consistent economic management and rapid growth helped Paraguay attract international investors in recent years. After securing its banking licence in 2023, Ueno rapidly expanded its presence across Paraguay. The digital lender, which was rebranded from a finance company that had operated for decades, attracted customers through generous grocery cashback offers.

Under Pena's government, substantial public funds were deposited with Ueno. The president also appointed Carlos Carvallo, the president of Financiera Ueno, the institution that preceded Ueno Bank, to lead the central bank responsible for supervising the lender. By last month, Ueno had reported approximately $800 million in public deposits, accounting for around a quarter of its total deposits. These included funds from the state pension and health fund, as well as operators of Paraguay's major hydroelectric dams.

However, concerns over the bank's lending activities were growing within the central bank. According to ABC Color, a leading Paraguayan newspaper, inspectors identified risky lending to insiders during a June inspection. Ueno had reportedly extended substantial loans to companies connected to its owners, exceeding legal limits and without sufficient collateral to cover potential losses. On a single day in September 2025, nearly $39 million was reportedly transferred to three such firms. Pena repeatedly dismissed the warnings. As recently as last month, he defended Ueno and the central bank's supervision, describing the concerns as a smear campaign that was creating public anxiety.

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Customers locked out as bank branches shut

The situation unravelled on Monday when regulators investigating Ueno's loans to companies linked to its owners discovered poorly documented lending practices, according to the central bank. Investigators also identified expenses that the bank had incorrectly recorded as assets. Following corrections to its financial records, Ueno's capital, which banks are required to maintain as protection against losses, dropped to less than half the legally required minimum.

The central bank seized control of the lender on Tuesday and announced that customers' accounts, along with the remaining valuable assets, would be transferred to other banks before the institution was liquidated. The bank's mobile application, cards and transfer services stopped working, while its branches shut their doors. Customers were left waiting outside in long queues, unable to withdraw their money. On Wednesday, a surge in customers attempting to open accounts at other financial institutions caused mobile banking applications at several banks to crash, intensifying public panic.

Authorities appealed for calm and said repayments to depositors had begun. They also opened new accounts at other banks for approximately 280,000 customers who had held accounts exclusively with Ueno. "The banking system is sound," insisted Pedro Acosta Bernal, who was appointed interim central bank president on Wednesday after Carvallo resigned at Pena's request. Authorities have detained eight senior Ueno executives, including founder Miguel Vazquez and bank President Juan Manuel Gustale. Prosecutors have also charged 27 bank officials and business associates with offences that include breach of trust and attempted fraud. Lawyers representing several detained individuals said they needed time to examine the allegations before commenting.

Protests intensify across Paraguay

Hundreds of employees from Ueno Bank and other businesses under its parent conglomerate, Grupo Vazquez, gathered outside the Labor Ministry on Thursday. The workers demanded severance payments and unpaid salaries as their employment situations remained uncertain and their wages were trapped in the collapsed bank. A day earlier, hundreds of retirees, depositors, university students and workers had taken to the streets of Asunción. "We want your head, Peña!" they shouted.

Protesters carried signs demanding the president's impeachment, describing him as ‘the enemy of savers’ and calling for their money to be returned. Riot police used pepper spray and rubber pellets to disperse the crowds. For many demonstrators, Ueno's collapse represented more than a banking failure. They viewed it as another example of alleged corruption and the close connections between political leaders and powerful business interests.