Paraguay’s president resigns following a crisis over a bank collapse, leaving millions of customers unable to access their money

Paraguayan President Santiago Peña is facing a criminal investigation and impeachment proceedings following the collapse of a major bank.

Peña resigned from office earlier on Thursday after Ueno Bank was shut down in the middle of the night due to a solvency crisis, leaving millions of customers unable to access their money and triggering a scandal.

Paraguay’s Attorney General has opened three criminal cases against Peña and other former officials related to the bank crisis.

The lower chamber of Congress has approved his impeachment, accusing him of “serious and systematic dereliction of duty” in connection with his dealings with the bank. The Senate later announced that it would start an impeachment trial.

Peña said he would present himself in the trial and defend himself: “I will do so with arguments and evidence, with respect for the Constitution and the institutions of the Republic,” he said.

Peña submitted his resignation while lawmakers were debating charges brought against him by 35 opposition lawmakers and ruling-party dissidents. The charges proposed “removing from office” the president, who took power in August 2023 for a five-year term.

Soon after he announced he would resign, Paraguay’s Chamber of Deputies voted unanimously to trigger impeachment proceedings.

Both chambers of Congress then convened a joint session to consider his resignation, but it was adjourned without a decision after several lawmakers walked out in the middle of the vote.

If lawmakers had accepted his resignation, he would have been given immunity and special protections; if they remove him from power, he won’t.

Lawmakers that oppose the president said Peña is still president and must face justice.

His impeachment trial started in the Senate on Thursday night and is expected to continue Friday.

“This guy, Santiago Peña, needs to be jailed. An arrest warrant must be issued … pretrial detention, straight to jail,” Senator Yolanda Paredes told reporters earlier.

Peña’s party, the right-wing Colorado Party, has a majority in both houses of Congress.

The presidential office insisted that Peña would show up to the trial. A spokesperson dismissed rumors that he had fled the country, saying he remains in the capital without specifying his exact whereabouts.

Peña said earlier that he was resigning to give peace of mind to Paraguayans “who entrusted their savings to our financial system.”

“I have made the decision to submit my resignation from the Presidency of the Republic. I do so with the stability of our country, social peace, and the need to preserve our public institutions in mind,” he said in a message posted on social media.

Peña entered office as one of the youngest presidents in Paraguayan history at the age of 44. He served as Minister of Finance from 2015 to 2017 during the presidency of Horacio Cartes and also served as a director of the Central Bank.

He is one of the staunchest allies of US President Donald Trump’s administration and has aligned with Trump’s political priorities, particularly on immigration and security.

How the scandal unfolded
Paraguay’s president became embroiled in the crisis that erupted after the intervention of Ueno Bank, a private institution to which he has been linked and which, during his administration, received millions in funds from public entities, including the Social Security Institute (IPS), which manages the pensions of most of the country’s workers.

CNN contacted the presidency before Peña’s resignation to ask about the allegations against him.

The Central Bank of Paraguay found that Ueno Bank’s solvency ratio — with 2.9 million customers in a country of 6.1 million people — had fallen below 50% of the required minimum, “as a result of adjustments made to its financial statements during the regularization process.”

As a result of the resolution or dissolution proceedings, the savings of millions of customers were frozen at the financial institution, which is also known for sponsoring local soccer teams and Paraguay’s national team.

Attorney General Emiliano Rolón Fernández ordered the opening of three cases to investigate “the supervision and resolution of Ueno Bank SA, the placement of public funds in said entity and the actions of authorities from different State institutions.”

Paraguay was shaken by Tuesday’s intervention of Ueno, an institution that, according to authorities, violated limits on loans to related companies.

Paraguay’s Central Bank said Thursday night it would start processing guarantee payments to certain Ueno customers in stages.

Peña announced his resignation after two days of long lines at banks, anxiety and street protests.

The country has been trying to position itself as a regional financial hub by capitalizing on the investment-grade status it attained in recent years, after receiving approval from two of the world’s leading rating agencies.