Paraguay President Pena resigns under mounting pressure from bank collapse

ASUNCION – Paraguayan President Santiago Pena resigned on Nov 5 following the collapse of a prominent digital lender to which he had former business links, putting him under intense pressure as nearly half the population was left without access to their bank accounts.

He was resigning “with the stability of our country, social peace, and the need to preserve our democratic institutions in mind”, Pena said in a recorded video address on Nov 5.

The fallout from the collapse of the bank, called ueno, has already led to the resignation of Paraguay’s central bank chief and the detention of eight ueno executives.

The crisis has undermined Paraguay’s hard-won reputation as a stable destination for foreign investment, especially from neighbouring Brazil. Paraguay’s sovereign international bond prices tumbled following news of the resignation.

Opposition lawmakers had called an extraordinary session for Nov 5 to begin the process of filing an impeachment motion in Congress, as protesters demanded Pena’s resignation.

Pena, an ally of US President Donald Trump, lost the backing of members of his own conservative party ahead of the impeachment debate.

Despite his resignation, the session went ahead as planned. The Lower House approved Pena’s impeachment while rejecting an impeachment motion against Vice-President Pedro Alliana, who is next in line for the presidency following Pena’s resignation.

The measure now moves to the Senate, which will vote on impeachment proceedings later on Nov 5. Pena’s decision to step down must also be ratified by the Senate.

An impeachment trial could delay the process of Alliana being sworn in to replace Pena.

Political ties

Lawmakers had accused Pena of conflicts of interest, misuse of pension funds and institutional cover-ups linked to the collapse of ueno, which had grown quickly from a niche fintech player into a mid-tier bank administering close to US$850 million (S$1.09 billion) in public funds.

“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfill its purpose, and that public funds – as well as the resources that belong to all Paraguayans – be protected,” Pena said in his address.

Paraguay's central bank intervened in ueno after determining that it had breached minimum solvency requirements, setting off a crisis that has left the company's roughly 3 million customers, in a country of 6.5 million people, unable to access accounts.

Ueno has made no public statement on the issue.

Pena, an economist who was elected in 2023, has faced intense political scrutiny because of his past business ties to the collapsed bank. Pena was a shareholder of Grupo Vazquez, the group that owned the bank until March 2025.

Peña has repeatedly rejected suggestions of improper ties. He has described the controversy as the political escalation of what began as a technical and regulatory issue and has argued that any wrongdoing should be addressed through the courts.

In a note to clients, JPMorgan said the ueno developments had “rapidly acquired a political dimension”, adding that risks to the wider financial system would hinge on “the speed and transparency” of the authorities’ response.

Prosecutors issued arrest warrants for the eight ueno executives on Nov 3 and they later turned themselves in. Courts ordered their assets frozen as the investigation widened, and some of the executives were subsequently placed under house arrest. REUTERS