Paraguayan President Santiago Peña dismissed after Ueno bank collapse freezes millions in savings and sparks protests

Paraguay’s lower house voted unanimously on Thursday to impeach President Santiago Peña just minutes after he announced his resignation as the collapse of a major digital bank tied to his government froze the savings of millions, sent protesters into the streets and turned his own party against him.

The 78-0 vote marked a stunning rejection of Peña by lawmakers from his long-ruling Colorado party, who joined the opposition in backing his impeachment after three days of demonstrations rocked the capital, Asunción. The vote sends the impeachment to the Senate, where a two-thirds majority is needed to convict the president and formally remove him from office.

The indictment came as thousands of people protested for a third day as they tried to recover lost savings, wages and pensions from Ueno Bank, a major provider of digital loans.

Peña, a close ally of US President Donald Trump, announced his decision in a video posted on X as lawmakers debated his impeachment, saying he was stepping down for “the stability of our country, social peace and the need to preserve our democratic institutions.”

The president, who until last year held a stake in a company linked to Ueno Bank, expressed regret but stopped short of accepting responsibility for the banking crisis that plunged the South American nation long prized by foreign investors for its stability into financial and political turmoil.

“I also want to apologize to people if I let them down at any point,” he said. “I never intended to betray the trust they placed in me.

The extraordinary turn of events set the stage for the handover of power at the end of Thursday. Congress was expected to formally accept Peña’s resignation at 5 p.m., clearing the way for Vice President Pedro Alliana to take the presidential oath an hour later. Alliana will serve Peña until August 2028, with lawmakers expected to choose a new vice president.

From star lender to foreclosed bank

Ueno Bank, which went from an obscure financial company to a household name in less than five years, claimed more than 60% of Paraguayan adults as customers. They are now trying to recover their savings, state pensions and unpaid wages for the 7,000 staff affected by the bank closure.

Many Paraguayans are questioning how a bank linked to the president, which until last year held a stake in the Ueno holding company, could have grown so quickly in size and importance despite repeated warnings about its dubious lending practices.

The answer lies in the uneasy closeness of Peña’s long-ruling Colorado party to local regulators and business elites, a weakness that persists even as stable economic management and rapid growth have made Paraguay a darling of international investors in recent years.

“Santiago Peña and the Colorado Party have stolen all our savings,” said Luis Pineda, one of the protesters who marched to Congress on Wednesday. “We’ve had enough of 70 years of looting.”

Soon after obtaining a banking license in 2023, Ueno seemed to be everywhere in Paraguay. The digital lender, a rebranded version of a decades-old finance company, has lured customers with generous cash-back offers on groceries, grown to more than 70 locations, sponsored Paraguay’s national soccer team and plastered its name on the country’s main stadium.

Under Peña, government money poured into Uena’s coffers. He also appointed Carlos Carvallo, president of Financiero Ueno, the predecessor of Ueno Bank, to run the central bank, the agency tasked with overseeing the digital lender.

Last month, Ueno reported holding about $800 million in public deposits, about a quarter of its total holdings, including money from the state’s pension and health fund and the operators of Paraguay’s giant hydroelectric plants.

Even as pensioners’ savings and other public money piled up in Ueno, concerns were escalating inside the central bank. In June, its inspectors discovered a pattern of risky insider lending, ABC Color, a leading Paraguayan newspaper, reported. Ueno lent large sums to companies tied to its owners, beyond what the law allows, and without sufficient collateral to cover debts should they go bad. In a single day in September 2025, almost $39 million went to three such companies.

Peña brushed off the warning repeatedly. As recently as last month, he defended Ueno and the central bank’s oversight, dismissing the concerns as a smear campaign to scare the public.

Long queues outside branches, but customers are locked out

But on Monday it all came crashing down. Regulators investigating Ueno’s loans to companies linked to its owners found poorly documented loans, according to the central bank, as well as expenses the bank incorrectly counted as assets.

Once the books were repaired, Ueno’s capital, which banks must keep to absorb losses, fell to less than half the legal minimum. The central bank seized the lender on Tuesday and announced plans to move customer accounts, along with any assets that still have value, to other banks before liquidating what’s left.

Ueno’s apps, cards and transfers went dark, and its branches locked their doors, leaving desperate depositors standing outside with no way to withdraw their savings. On Wednesday, the rush to open new accounts elsewhere crashed other banks’ mobile apps, sparking public panic.

Officials appealed for calm and said they had begun paying depositors and opened new accounts elsewhere for about 280,000 who had only Ueno in the bank.

“The banking system is healthy,” insisted Pedro Acosta Bernal, appointed interim president of the central bank on Wednesday after Carvallo stepped down at Peña’s request.

Authorities detained eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustal. Prosecutors also charged 27 bank officials and business associates with crimes including breach of trust and attempted fraud. Lawyers for several of the detainees said they needed time to review the allegations before they could comment.

Demonstrators in the streets

Hundreds of workers at Ueno Bank and other companies belonging to Grupo Vázquez, the bank’s parent conglomerate, protested outside the Labor Ministry on Thursday, demanding severance pay and unpaid wages, with their jobs in limbo and their salaries trapped in the failing bank. A day earlier, hundreds of pensioners, depositors, university students and workers flooded the streets of the capital, Asunción.

“We want your head, Peña!” they shouted. Their signs demanded Peña’s resignation, calling him an “enemy of savers” and imploring “Give us back our money.” Riot police fired pepper spray and rubber bullets to disperse the crowds.

Many protesters saw Ueno’s collapse not just as the result of dodgy banking but as a case study in official corruption. Only Venezuela ranks worse in South America on the latest index of perceived corruption by Transparency International, a global watchdog.

“It’s another attack on honest, hard-working citizens, people whose small savings are the result of years of work,” said protester Belarmino Balbuena.

The bank’s logo has already been scrubbed from the national stadium that once bore the name Ueno. But across the capital, fresh graffiti condemned politicians as thieves.