ASUNCIÓN: Paraguayan President Santiago Peña has offered to resign amid a political and financial crisis triggered by the collapse of digital lender Ueno Bank, which has left around three million customers unable to access their accounts.
Peña announced his decision on Thursday, November 5, saying he was stepping down to protect national stability and democratic institutions. However, both chambers of Congress rejected his resignation offer, and lawmakers moved ahead with impeachment proceedings that could remove him from office.
The crisis has shaken Paraguay's banking sector and triggered protests in the capital, Asunción, as depositors, pensioners and workers struggle to recover their money. Ueno, which served more than 60 per cent of the country's adult population, had become one of Paraguay's major digital lenders.
The Central Bank of Paraguay placed Ueno under official intervention after finding that its solvency ratio had fallen below half the legally required minimum. An examination of the bank's accounts reportedly uncovered risky lending to companies linked to its owners, inadequate documentation, and improperly recorded assets.
The bank's services, including its mobile application, card payments and transfers, were suspended, leaving customers unable to access their savings. Ueno also held around $800 million in public-sector deposits, including funds linked to state institutions and the country's pension and health system.
The bank's collapse has raised questions over Peña's past business connections with the financial institution. He had held a stake in Grupo Vázquez, the business group associated with Ueno, before selling it in March 2025. Opposition lawmakers have accused him of conflicts of interest, misuse of pension funds and shielding the lender from scrutiny. Peña has denied wrongdoing and said the matter should be investigated by the courts.
The impeachment push gathered momentum after Peña lost support from members of his own conservative Colorado Party. The lower house approved an impeachment motion unanimously, while the Senate moved towards proceedings to determine his removal from office.
The crisis has also triggered criminal investigations into the bank's collapse and the handling of public funds. Prosecutors have charged 27 bank officials and associates with alleged offences including breach of trust and attempted fraud. Several senior executives have been detained.
Authorities have introduced a repayment mechanism through a state deposit guarantee fund. The government expects the scheme to cover the full deposits of around 97 per cent of Ueno's customers, with payments beginning for smaller accounts. The collapse has also affected employment, with the Labour Ministry estimating that around 7,000 direct and indirect jobs are at risk.
Vice-President Pedro Alliana is next in line to assume the presidency if Peña is removed from office. Alliana, however, has distanced himself from the outgoing president amid the crisis.
The banking turmoil has rattled investor confidence in Paraguay, previously viewed as one of South America's more stable economies. The country's currency weakened sharply, and sovereign bond prices fell following the political developments.
With inputs from media houses