Paraguayan President Santiago Peña is under criminal investigation following the collapse of Ueno Bank, prosecutors announced Thursday, hours after the South American leader announced his resignation and was impeached. The crisis at the digital bank turned Peña's long-ruling Colorado Party against him, marking a rapid reversal for the former International Monetary Fund economist who had recently been welcomed in Washington as a key ally of the Trump administration.
The lower house of Congress voted 78-0 to impeach Peña, sending the charges to the Senate. Congressional leaders are set to continue voting Friday on whether to accept Peña's resignation, a move that would clear the way for Vice President Pedro Alliana to be sworn in without waiting for a full Senate trial. However, opposition senators are demanding that Peña be formally removed from office rather than allowed to resign, arguing that resignation would preserve his eligibility to become a senator for life, granting him legal protections that could hinder prosecution.
What the Left Is Saying
Opposition figures and protesters characterize the collapse as a case study in official corruption and the undue influence of the Colorado Party on regulatory bodies. Luis Pineda, a protester who marched to Congress, stated, "Santiago Peña and the Colorado Party have stolen all our savings. We are fed up with 70 years of plunder." Adolfo Villalba, another protester, argued that the resignation was an attempt to evade justice, stating, "Let the impeachment process take place and let him lose his immunity."
Belarmino Balbuena, one of thousands who marched on the capital, Asunción, described the event as "yet another assault on honest, hard-working citizens, people whose small savings are the fruit of years of labor." Critics point to the appointment of Carlos Carvallo, the president of Financiera Ueno (Ueno Bank's predecessor), to lead the central bank—the very agency charged with supervising the digital lender—as evidence of a conflict of interest that regulators ignored despite warnings about risky lending practices.
What the Right Is Saying
President Peña framed his resignation as a necessary step to protect national stability and democratic institutions. In a video posted to X, Peña stated he was stepping down in the interest of "the stability of our country, social peace and the need to preserve our democratic institutions." He expressed contrition but stopped short of accepting direct responsibility for the financial turmoil, saying, "I want to apologize to the people if I have failed them at any point. It was never my intention to betray the trust they placed in me."
Peña's mentor, Colorado Party leader and former President Horacio Cartes, initially backed the impeachment, stating the party would not side with "the plundering of public and private funds and pensioners' money." Meanwhile, legal representatives for Ueno Bank executives pushed back against criminal charges. José Fernández Zacur, lawyer for bank President Juan Manuel Gustale, argued that senior executives had relied on staff for lending decisions, telling local media, "The president or board is not responsible for deciding who receives a particular loan."
What the Numbers Show
Ueno Bank claimed more than 60% of Paraguay's adults as customers and reported holding roughly $800 million in public deposits as of last month, accounting for about a quarter of its total assets. These deposits included funds from the state pension and health fund and the operators of Paraguay's hydroelectric dams. Central bank inspectors found in June that Ueno had extended large sums to companies tied to its owners beyond legal limits and without sufficient collateral. Following a review of these loans, Ueno's capital fell to less than half the legal minimum, prompting regulators to seize the bank Tuesday.
The Labor Ministry estimates the collapse has affected approximately 7,000 direct and indirect jobs at the bank and its related businesses. Under a new law passed by Congress, a state guarantee fund is required to repay stranded depositors within five business days. The fund insures up to about $36,000 per customer, which the central bank states will cover the full balances of an estimated 97% of clients. Prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud, with a judge ordering six executives, including founder Miguel Vázquez, jailed pending trial.
The Bottom Line
The political and financial crisis in Paraguay highlights the vulnerabilities of rapid digital banking expansion when coupled with close ties between government officials and private lenders. While the state guarantee fund aims to stabilize the immediate financial impact for most depositors, the legal and political fate of President Peña remains uncertain. The key issue to watch is whether Congress will accept his resignation or proceed with a Senate trial for removal, a decision that will determine if Peña retains immunity from prosecution for the alleged mishandling of public funds.