Paraguay president faces impeachment as Ueno Bank collapse freezes millions of accounts

Paraguay has been plunged into one of its deepest political crises in more than a decade as President Santiago Peña faces an impeachment trial linked to the collapse of Ueno Bank, a major digital lender with nearly three million customers. Peña offered to resign as public anger intensified, but lawmakers moved ahead with impeachment proceedings rather than immediately accepting his resignation, leaving the country’s political leadership in an extraordinary state of uncertainty.

The banking crisis has quickly expanded into a confrontation over political accountability, financial regulation and alleged conflicts of interest. Ueno Bank’s failure froze access to money for millions of customers, while prosecutors opened investigations into the lender, government officials and institutions responsible for overseeing Paraguay’s financial system.

Why Ueno Bank’s collapse has triggered an impeachment crisis for Santiago Peña

Ueno Bank grew rapidly from a relatively small digital lender into one of Paraguay’s most important financial institutions, eventually attracting nearly half of the country’s population as customers. The bank also received more than $800 million in public funds, making questions about its regulation and government connections particularly politically sensitive.

Lawmakers have focused heavily on Peña’s previous financial ties to Ueno’s parent company. The president previously held shares in Grupo Vázquez, which controls the bank, before selling his stake in 2025, while critics have also questioned his decision to appoint a former Ueno executive to lead Paraguay’s central bank.

The impeachment allegations also include claims that public pension deposits placed with Ueno exceeded legal limits. Peña denies wrongdoing and has argued that the proceedings against him have moved so quickly that he has not been given sufficient opportunity to prepare a defense.

The lower house voted unanimously to impeach Peña and send the case to the Senate, an extraordinary political reversal for a president who had enjoyed strong backing from the dominant Colorado Party. Even former President Horacio Cartes, Peña’s longtime political mentor and one of the party’s most influential figures, has backed his removal.

Why Paraguay’s Congress is pursuing impeachment even after Peña offered to resign

Peña attempted to resign as pressure mounted, telling the country that he regretted any loss of public trust during his administration. Congress, however, did not immediately allow the resignation to settle the crisis because the constitutional consequences of resignation and impeachment are very different.

Under Paraguay’s constitutional system, a former president who leaves office through resignation can become a senator for life and receive parliamentary immunity. Opposition lawmakers therefore want Peña removed through impeachment rather than resignation, arguing that he should remain exposed to potential criminal prosecution connected with the banking collapse.

That distinction has effectively transformed what might ordinarily have been a presidential resignation into a battle over how Peña leaves office. His remaining allies favor accepting the resignation, while opponents want the Senate to convict and formally remove him.

Conviction requires the support of 30 members in Paraguay’s 45-seat Senate. If Peña is removed or ultimately leaves office, Vice President Pedro Alliana is expected to complete the presidential term through August 2028.

Millions of Ueno Bank customers remain locked out of their savings as protests spread

The political crisis has been intensified by the immediate financial consequences for ordinary Paraguayans. Nearly three million Ueno customers have been unable to withdraw money, make digital payments or use their bank cards since regulators intervened in the lender and froze accounts.

Thousands of protesters have taken to the streets of Asunción and other cities demanding access to their money and accountability from political and financial officials. The demonstrations have continued for several nights, reflecting anger from families, businesses and small savers whose finances have been disrupted by the bank’s collapse.

Paraguay’s central bank has sought to reassure depositors that Ueno’s failure is an isolated event rather than evidence of broader weakness across the country’s financial system. The crisis is nevertheless particularly damaging because Paraguay has generally been regarded as one of South America’s more economically and politically stable countries.

The authorities have also intensified their investigation into Ueno’s leadership. Former chief executive Miguel Vázquez faces charges including breach of trust and attempted fraud, while several bank directors have been placed in pretrial detention as prosecutors examine the circumstances leading to the institution’s collapse.

Peña’s government begins to unravel as senior officials resign during impeachment proceedings

The crisis has spread rapidly through Peña’s administration, with several senior officials leaving their positions as the Senate impeachment process advances. Interior Minister Enrique Riera resigned, followed by Peña’s chief of staff Javier Giménez and legal adviser Roberto Moreno, further weakening the president’s political position.

Peña requested an additional 72 hours to prepare his response to the impeachment allegations, arguing that he had received a lengthy indictment and hundreds of pages of supporting material only shortly before proceedings began. Senators rejected that request, and Peña later stayed away from the impeachment hearing while his lawyers argued that the process had denied him adequate due process.

Prosecutors have meanwhile opened multiple investigations related to Ueno Bank’s collapse, including inquiries involving Peña and other current and former government officials. Those investigations mean that even if the immediate political question is resolved, the legal fallout from the banking crisis could continue for considerably longer.

The unfolding crisis therefore extends far beyond whether Peña remains president. Paraguay is now facing simultaneous questions about the safety of millions of bank deposits, the independence of financial regulators, alleged political conflicts of interest and whether the country can navigate a presidential transition without further destabilizing its economy.

Key takeaways on the Paraguay impeachment crisis and Ueno Bank collapse

• President Santiago Peña faces impeachment after the collapse of Ueno Bank triggered a major financial and political crisis.
• Nearly three million customers have been unable to access money or use banking services following the regulator’s intervention.
• Peña offered to resign, but lawmakers are pursuing impeachment because resignation could provide him parliamentary immunity.
• The allegations center on Peña’s former financial ties to Ueno and questions about the bank’s regulatory oversight.
• Senior government officials have resigned as Peña’s political support within the ruling Colorado Party has rapidly weakened.
• Prosecutors are investigating the bank’s collapse while several Ueno executives face criminal proceedings.