Paraguay President Santiago Peña Resigns After Bank Collapse, But Congress Rejects Resignation as Impeachment Proceeds

Paraguayan President Santiago Peña announced his resignation on Thursday, November 5, 2026, after the collapse of Ueno Bank—a digital lender once linked to him—froze the savings of nearly three million customers and triggered protests that rocked the capital for three days. But hours later, Congress failed to approve his resignation, leaving him formally in office as the Senate prepares to proceed with an impeachment trial.

Peña, a 47-year-old former International Monetary Fund economist, posted a video on X announcing his decision to step down "for the stability of our country, social peace and the need to preserve our democratic institutions" . "I want to apologize to the people if at any point I failed," he said. "It was never my intention to betray the trust you placed in me" .

Congress Deadlock

The Chamber of Deputies voted unanimously—78-0—to approve impeachment charges against Peña minutes after his announcement . But a joint session of Congress convened to address the resignation was suspended due to a lack of quorum after lawmakers from the ruling Colorado Party walked out, preventing a decision on whether to accept Peña's resignation . Senate President Basilio Núñez announced the upper house would proceed with the impeachment process, and Peña said he would appear to exercise his right to defence . Under Paraguay's Constitution, Congress must accept or reject a president's resignation; Vice President Pedro Alliana is next in line .

How a Star Lender Collapsed

Ueno Bank grew from an obscure finance company into a household name in under five years, claiming more than 60 percent of Paraguay's adult population as customers. It lured clients with generous cash-back offers, expanded to over 70 locations, sponsored the national football team, and plastered its name on the country's main stadium . As of last month, it held roughly $800 million in public deposits—about a quarter of its total—including money from the state pension and health fund and the operators of Paraguay's hydroelectric dams .

But internal warnings had been mounting. In June, central bank inspectors found a pattern of risky lending to insiders—large sums extended to companies tied to Ueno's owners beyond legal limits and without sufficient collateral. On a single day in September 2025, nearly $39 million went to three such companies . Peña repeatedly dismissed the concerns as a smear campaign .

The collapse came on Monday, November 2, when regulators found poorly documented lending and expenses wrongly counted as assets. Once the books were corrected, Ueno's capital fell to less than half the legal minimum. The central bank seized the lender on Tuesday and announced plans to move customer accounts to other banks before liquidation . The bank's app, cards, and transfers went dark; branches locked their doors; desperate depositors lined up outside with no way to access their savings .

Conflict of Interest Allegations

The crisis raised uncomfortable questions about the proximity between Peña's Colorado Party and the country's regulators. Peña held a stake in Ueno's holding company until March 2025 . He also appointed Carlos Carvallo—president of Financiera Ueno, the bank's predecessor—to run the central bank, the agency responsible for supervising the digital lender. Carvallo resigned amid the crisis .

Opposition lawmakers accused Peña of conflict of interest, regulatory manipulation, and diverting pension resources . Even Peña's mentor, former President Horacio Cartes, withdrew his support, saying the Colorado Party would not side with "the plundering of public and private funds and pensioners' money" .

Protests and Economic Fallout

Protests rocked Asunción for three days. Hundreds of retirees, depositors, students, and workers flooded the streets, chanting "We want your head, Peña!" and carrying signs calling him "the enemy of savers." Riot police fired pepper spray and rubber pellets to push back crowds . On Thursday, employees of Ueno Bank and other companies belonging to Grupo Vázquez, the bank's parent conglomerate, protested outside the Labour Ministry demanding severance and unpaid wages .

The turmoil hit Paraguay's currency. The guaraní fell nearly 4 percent against the U.S. dollar on Thursday, bringing its losses for the week to nearly 7 percent .

Prosecutors ordered the detention of eight Ueno Bank executives, including founder and CEO Miguel Vázquez, on allegations related to breach of trust . A judge ordered the preventive seizure of their assets .

What Comes Next

The central bank has activated the Deposit Guarantee Fund, which protects deposits up to approximately $38,600 per person, with an initial payout of up to 10 million guaraníes (about $1,675) to be disbursed promptly . The bank managed pension payments for some 32,000 retirees, and the state pension institute held $355 million in Ueno investments—about 9 percent of its total portfolio .

Peña's exit, if ultimately accepted, would end a mandate that was to run until August 2028 and deliver a stunning blow to the Colorado Party, which has governed Paraguay for nearly eight decades with only a five-year interruption from 2008 to 2013 . For a president once welcomed in Washington as a key ally of the Trump administration, the fall was swift—brought down not by external pressure but by a bank that grew too fast, lent too loosely, and sat too close to power .