A demonstrator holds a mock U.S. dollar bill depicting Paraguayan President Santiago Peña during a protest against the government and Ueno Bank, which Paraguay’s central bank seized amid a solvency crisis, in Asunción, Paraguay, Wednesday.
Jorge Saenz/AP
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Jorge Saenz/AP
ASUNCIÓN, Paraguay — Paraguayan President Santiago Peña announced his resignation Thursday after the collapse of a major digital bank tied to his government triggered widespread protests, froze millions of people’s savings and cost him the support of his own party.
The crisis at Ueno Bank turned Peña’s long-ruling Colorado Party against him, a stunning reversal for the former International Monetary Fund economist who had enjoyed the backing of the country’s most powerful politicians and was welcomed in Washington just weeks ago as a key ally of the Trump administration.
Minutes after Peña’s announcement, the lower house voted 78-0 to impeach him, sending the charges to the Senate. Congressional leaders were expected to accept his resignation later Thursday, clearing the way for Vice President Pedro Alliana to be sworn in without waiting for a Senate trial.
Opposition senators were still demanding a trial, arguing that allowing Peña to resign would preserve his eligibility to become a senator for life, with legal protections that could prevent his prosecution.
Paraguay President Santiago Peña speaks to the media at United Nations headquarters, Sept. 19, 2023.
Ted Shaffrey/AP
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Ted Shaffrey/AP
As lawmakers debated his impeachment, Peña said in a video posted to X that he was stepping down in the interest of “the stability of our country, social peace and the need to preserve our democratic institutions.”
Even Peña’s mentor, Colorado Party leader and former President Horacio Cartes, backed impeachment, saying the party would not side with “the plundering of public and private funds and pensioners’ money.” The United States Treasury sanctioned Cartes in 2023 over bribery allegations that the Trump administration lifted last year.
Peña, who until last year held a stake in a company linked to Ueno, expressed contrition. But he stopped short of accepting responsibility for the turmoil, which has left millions of depositors, retirees and workers scrambling to recoup their frozen savings and unpaid wages.
“I 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 turmoil has hit Paraguay’s currency. The guaraní fell nearly 4% against the U.S. dollar Thursday, bringing its losses this week to nearly 7%, according to central bank exchange-rate data.
From star lender to seized bank
Ueno Bank, which exploded from an obscure finance company to a household name in less than five years, claimed more than 60% of Paraguay’s adults as customers. Many Paraguayans are left asking how a bank linked to the president could grow so rapidly in size and importance despite repeated warnings about its lending practices.
The answer lies in the uncomfortable proximity of Peña’s Colorado Party to the country’s regulators and business elite, a weakness that has endured even as steady economic management and rapid growth recently earned Paraguay coveted investment-grade credit ratings.
“Santiago Peña and the Colorado Party have stolen all our savings,” said Luis Pineda, one of the protesters marching to Congress on Wednesday. “We are fed up with 70 years of plunder.”
Soon after winning its banking license in 2023, Ueno seemed to be everywhere in Paraguay. The digital lender, a rebranded version of a decades-old finance company, lured customers with generous cash-back offers on groceries, grew to more than 70 locations, sponsored Paraguay’s national soccer team and plastered its name on the country’s main stadium.
Government money poured into Ueno’s coffers under Peña. He also appointed Carlos Carvallo, president of Financiera Ueno, the predecessor to Ueno Bank, to run the central bank, the agency charged with supervising the digital lender.
As of last month, Ueno reported holding 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 giant hydroelectric dams.
Even as retirees’ savings and other public money piled up at Ueno, worries were escalating inside the central bank. In June, its inspectors found a pattern of risky lending to insiders, reported ABC Color, a leading Paraguayan newspaper. Ueno had extended large sums to companies tied to its owners, beyond what the law allows and without enough collateral to cover the debts if they went bad.
As recently as last month, Peña defended Ueno and the central bank’s oversight, dismissing the concerns as a smear campaign that was spooking the public.
Long lines 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 lending, the central bank said, as well as expenses the bank had wrongly counted as assets.
Once the books were corrected, Ueno’s capital, the cushion banks must keep to absorb losses, fell to less than half the legal minimum. The central bank announced the lender’s seizure Tuesday, beginning a process to transfer deposits and recoverable assets to other banks before liquidating what remained.
Ueno’s app, cards and transfers went dark and its branches locked their doors, leaving desperate depositors lined up outside. On Wednesday, a rush to open new accounts elsewhere crashed other banks’ mobile apps, fueling public panic.
Officials have appealed for calm. Under a law rushed through Congress on Wednesday, a state guarantee fund must repay stranded depositors within five business days, starting Thursday with small accounts of up to about $1,600 held by customers with no debts to Ueno. The fund insures up to about $36,000 per customer, which the central bank says will cover the full balances of an estimated 97% of clients.
On Thursday, a judge ordered six Ueno executives, including founder Miguel Vázquez and bank President Juan Manuel Gustale, jailed pending trial and two others placed under house arrest. Prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud, alleging that Ueno made large loans to related companies without adequate guarantees and diverted some of the money to other group businesses.
Gustale’s lawyer pushed back on the charges, arguing that senior executives had relied on staff for lending decisions. “The president or board is not responsible for deciding who receives a particular loan,” José Fernández Zacur told local media.
Protesters in the streets
Still in their Ueno uniforms, young employees burned their credit cards and cursed Peña outside the Labor Ministry on Thursday, demanding severance and unpaid wages. Peña’s resignation did little to calm them. Many vowed to keep protesting until lawmakers finished impeaching him, saying his departure alone would neither bring accountability nor return their money.
“Let the impeachment process take place and let him lose his immunity,” said Adolfo Villalba, one of the protesters on Thursday.
The Labor Ministry estimates the collapse has affected about 7,000 direct and indirect jobs at the bank and its related businesses.
Many saw Ueno’s collapse not just as reckless banking but as a case study in official corruption. Only Venezuela ranks worse in South America on Transparency International’s latest index of perceived corruption.
“This is yet another assault on honest, hard-working citizens, people whose small savings are the fruit of years of labor,” said Belarmino Balbuena, one of thousands who marched on Congress in the capital, Asunción, on Wednesday.
The crowds shouted, “We want your head, Peña!” Their signs branded him “the enemy of savers” and pleaded, “Give us back our money.” Riot police fired pepper spray and rubber bullets to push them back.
At the national stadium that once bore Ueno’s name, the bank’s logo had already been scrubbed away. Across the capital, fresh graffiti called politicians thieves.
This story originally appeared on NPR
