Paraguay Rejects President Peña's Resignation, Moves Ahead With Impeachment Over Bank Collapse

Paraguay’s political crisis deepened on Friday as the Senate pressed ahead with impeachment proceedings against President Santiago Peña, despite his announcement that he was stepping down following the collapse of Ueno Bank, which left millions of customers struggling to access their savings.

Peña announced his resignation on Thursday, citing the need to protect political stability and democratic institutions. However, Congress did not accept his departure, and the lower house voted unanimously, 78-0, to impeach him, with members of his ruling Colorado Party joining the opposition.

The charges have now moved to the Senate, where a two-thirds majority is required to convict and remove the President. Peña has sought a 72-hour extension to prepare his defence and indicated that he would appear before lawmakers to contest the allegations.

Vice-President Pedro Alliana is next in line to take over if Peña is removed. However, the transfer of power remains uncertain until the resignation and impeachment process are resolved.

The crisis erupted after the central bank seized Ueno Bank, a major digital lender, following the discovery of serious irregularities in its lending practices. The bank reportedly served nearly three million customers and held around USD 800 million in public deposits, including funds linked to pension and healthcare schemes.

Regulators found that the lender had extended large loans to companies connected to its owners, in some cases without adequate collateral. After accounting irregularities were corrected, its capital fell to less than half the legally required minimum. Its banking app, cards and transfer services stopped working, leaving depositors unable to access their money.

Authorities have begun shifting customer accounts to other banks, while an emergency deposit guarantee scheme is being activated. Initial repayments are intended to cover smaller accounts, with the broader guarantee providing protection of up to approximately USD 36,000 per customer.

The collapse has triggered criminal investigations into the bank’s operations and regulatory oversight. Eight senior executives have been detained or placed under judicial restrictions, while prosecutors have charged 27 bank officials and associates with offences including breach of trust and attempted fraud.

Peña has faced questions over his past financial links to a company associated with Ueno’s parent group and his appointment of a former executive from the lender’s predecessor as central bank chief. He has denied wrongdoing.

Thousands of depositors, pensioners and workers have protested in the capital, Asunción, demanding the return of their savings and unpaid wages. The crisis has also raised concerns over political influence in banking supervision and the protection of public funds.