Paraguay’s rightwing president resigns after savings of millions of people are frozen in banking crisis
Paraguay's rightwing president Santiago Peña resigned on Thursday, hours after the central bank ordered the resolution of Ueno Bank, freezing the deposits of 3 million people.
The resignation came after a political and financial crisis collapsed the country's banking system in recent days, with Ueno Bank at its centre.
The bank, which claimed to have about 60% of Paraguay's adult population as customers, was ordered into resolution by the central bank last Monday over insolvency.
This move froze the deposits of 3 million customers, leaving hundreds of thousands of families without access to money for food and basic daily expenses.
Banking collapse and protests
Bank executives were arrested, and people took to the streets in massive protests against the government's handling of the crisis.
Ueno Bank began as a finance company in the 1970s and, in 2021, was bought by Grupo Vázquez, one of Paraguay's largest business and industrial conglomerates.
At the end of 2023, it received authorisation from the central bank, already under Peña's administration, to operate as a digital bank.
The bank rapidly expanded its operations, attracting customers with generous cash-back offers on groceries and sponsoring Paraguay's national football team.
On Wednesday, the players released a letter "demanding" a "forceful response" from the government and the justice system.
Impeachment and political fallout
The bank came to manage between $800m and $850m in deposits from state and pension entities, including retirement funds, prompting criticism over conflicts of interest.
Peña had been a shareholder in the group that ran the bank until early last year and had reportedly been ignoring warnings from the central bank and the media about its operations.
Political pressure intensified on Thursday morning when his former ally the ex-president Horacio Cartes posted a message endorsing the impeachment.
"We will not stand on the side of the theft of public, private and pensioners' funds. We must think of the people and of the values we uphold in the Colorado party. We support the impeachment of the president of the republic, Santiago Peña, in order to restore the institutional order of the republic," he wrote.
Other lawmakers followed suit and began debating impeachment when Peña released a video announcing his resignation.
"Dear compatriots, today I address you at one of the most difficult moments of my life. With my heart set on Paraguay and with the conviction that our republic must always come before any person or circumstance, I have decided to submit my resignation as president of the republic," said Peña in a video.
Aftermath and next steps
With Peña's resignation, the vice-president, Pedro Alliana, automatically assumes the presidency to complete the constitutional term until August 2028.
Opposition senator Rafael Filizzola called the case the biggest fraud carried out from political power in the democratic era ... This is a bank created from political power, to use public money for private businesses linked to political power, with the president of the republic at the head of it.
"I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions," said the now former president.
About an hour after Peña's announcement, the lower house unanimously approved the impeachment motion, which now goes to the senate.
If approved, even after his resignation, he would lose his senate seat and, with it, parliamentary immunity, leaving him to face any criminal proceedings in the ordinary courts.
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