Paraguay President Santiago Peña resigns following bank collapse

Paraguayan Pres­i­dent San­ti­a­go Peña re­signed Thurs­day af­ter los­ing the back­ing of his own par­ty, as protests rocked the cap­i­tal for a third day over the col­lapse of Ueno Bank, a ma­jor dig­i­tal lender tied to his gov­ern­ment that froze mil­lions of peo­ple’s sav­ings.

Peña an­nounced his res­ig­na­tion in a video post­ed to X, say­ing he was step­ping down to pre­serve the coun­try’s sta­bil­i­ty and de­mo­c­ra­t­ic in­sti­tu­tions while law­mak­ers gath­ered in­side the Leg­isla­tive Palace de­bat­ed his im­peach­ment.

“I have made the de­ci­sion to sub­mit my res­ig­na­tion as pres­i­dent of the re­pub­lic,” said Peña, a one-time in­vestor in a com­pa­ny re­lat­ed to Ueno Bank. “I do so think­ing of the sta­bil­i­ty of our coun­try, so­cial peace and the need to pre­serve our de­mo­c­ra­t­ic in­sti­tu­tions.”

Un­der Paraguay’s Con­sti­tu­tion, Con­gress must ac­cept or re­ject the pres­i­dent’s res­ig­na­tion; Vice Pres­i­dent Pe­dro Al­liana is in line to suc­ceed him.

Peña of­fered an apol­o­gy but stopped short of ac­cept­ing re­spon­si­bil­i­ty for the bank­ing cri­sis that plunged the South Amer­i­can na­tion in­to fi­nan­cial and po­lit­i­cal tur­moil.

“I al­so want to apol­o­gize to the peo­ple if I have failed them at any point,” he said. “It was nev­er my in­ten­tion to be­tray the trust they placed in me.”

He said his pri­or­i­ty was en­sur­ing de­pos­i­tors re­cov­ered their sav­ings. “Be­hind every de­posit are years of hard work, sac­ri­fice and fam­i­ly dreams,” he said.

Ueno Bank, which ex­plod­ed from an ob­scure fi­nance com­pa­ny to a house­hold name in less than five years, claimed more than 60% of Paraguay’s adults as cus­tomers. They are now left scram­bling to re­coup their sav­ings, gov­ern­ment pen­sions, and, for 7,000 em­ploy­ees im­pact­ed by the bank’s clo­sure, un­paid wages.

Many Paraguayans are left ask­ing how a bank linked to the pres­i­dent, who un­til last year had a stake in Ueno’s hold­ing com­pa­ny, could grow so rapid­ly in size and im­por­tance de­spite re­peat­ed warn­ings about its du­bi­ous lend­ing prac­tices.

The an­swer lies in the un­com­fort­able prox­im­i­ty of Peña’s long-rul­ing Col­orado Par­ty to the coun­try’s reg­u­la­tors and busi­ness elite, a weak­ness that has en­dured even as steady eco­nom­ic man­age­ment and rapid growth made Paraguay a dar­ling of in­ter­na­tion­al in­vestors in re­cent years.

“San­ti­a­go Peña and the Col­orado Par­ty have stolen all our sav­ings,” said Luis Pine­da, one of the pro­test­ers march­ing to Con­gress on Wednes­day. “We are fed up with 70 years of plun­der.”

From star lender to seized bank

Soon af­ter win­ning its bank­ing li­cense in 2023, Ueno seemed to be every­where in Paraguay. The dig­i­tal lender, a re­brand­ed ver­sion of a decades-old fi­nance com­pa­ny, lured cus­tomers with gen­er­ous cash-back of­fers on gro­ceries, grew to more than 70 lo­ca­tions, spon­sored Paraguay’s na­tion­al soc­cer team and plas­tered its name on the coun­try’s main sta­di­um.

Gov­ern­ment mon­ey poured in­to Ueno’s cof­fers un­der Peña. He al­so ap­point­ed Car­los Car­val­lo, pres­i­dent of Fi­nanciera Ueno, the pre­de­ces­sor to Ueno Bank, to run the cen­tral bank, the agency charged with su­per­vis­ing the dig­i­tal lender.

As of last month, Ueno re­port­ed hold­ing rough­ly $800 mil­lion in pub­lic de­posits, about a quar­ter of its to­tal, in­clud­ing mon­ey from the state pen­sion and health fund and the op­er­a­tors of Paraguay’s gi­ant hy­dro­elec­tric dams.

Even as re­tirees’ sav­ings and oth­er pub­lic mon­ey piled up at Ueno, wor­ries were es­ca­lat­ing in­side the cen­tral bank. In June, its in­spec­tors found a pat­tern of risky lend­ing to in­sid­ers, re­port­ed ABC Col­or, a lead­ing Paraguayan news­pa­per. Ueno had ex­tend­ed large sums to com­pa­nies tied to its own­ers, be­yond what the law al­lows and with­out enough col­lat­er­al to cov­er the debts if they went bad. On a sin­gle day in Sep­tem­ber 2025, near­ly $39 mil­lion had gone to three such com­pa­nies.

Peña re­peat­ed­ly brushed off the warn­ings. As re­cent­ly as last month, he de­fend­ed Ueno and the cen­tral bank’s over­sight, dis­miss­ing the con­cerns as a smear cam­paign that was spook­ing the pub­lic.

FILE - Paraguay President Santiago Peña speaks to the media at United Nations headquarters, Sept. 19, 2023. (AP Photo/Ted Shaffrey, File)

Ted Shaffrey

Long lines out­side branch­es but cus­tomers are locked out

But on Mon­day, it all came crash­ing down. Reg­u­la­tors in­ves­ti­gat­ing Ueno’s loans to com­pa­nies linked to its own­ers found poor­ly doc­u­ment­ed lend­ing, the cen­tral bank said, as well as ex­pens­es the bank had wrong­ly count­ed as as­sets.

Once the books were cor­rect­ed, Ueno’s cap­i­tal, the cush­ion banks must keep to ab­sorb loss­es, fell to less than half the le­gal min­i­mum. The cen­tral bank seized the lender Tues­day and an­nounced plans to move cus­tomers’ ac­counts, along with what­ev­er as­sets still hold val­ue, to oth­er banks be­fore liq­ui­dat­ing what’s left.

Ueno’s app, cards and trans­fers went dark and its branch­es locked their doors, leav­ing des­per­ate de­pos­i­tors lined up out­side with no way to cash out their sav­ings. On Wednes­day, a rush to open new ac­counts else­where crashed oth­er banks’ mo­bile apps, fu­el­ing pub­lic pan­ic.

Of­fi­cials ap­pealed for calm and said they had be­gun re­pay­ing de­pos­i­tors, open­ing new ac­counts else­where for about 280,000 who had banked on­ly with Ueno.

“The bank­ing sys­tem is sound,” in­sist­ed Pe­dro Acos­ta Bernal, ap­point­ed in­ter­im cen­tral bank pres­i­dent Wednes­day af­ter Car­val­lo re­signed at Peña’s re­quest.

Au­thor­i­ties have de­tained eight se­nior Ueno ex­ec­u­tives, in­clud­ing founder Miguel Vázquez and bank Pres­i­dent Juan Manuel Gustale. Pros­e­cu­tors al­so charged 27 bank of­fi­cials and busi­ness as­so­ciates with of­fens­es in­clud­ing breach of trust and at­tempt­ed fraud. Lawyers for sev­er­al of the de­tained said they need­ed time to re­view the al­le­ga­tions be­fore they could com­ment.

Pro­test­ers in the streets

Hun­dreds of em­ploy­ees of Ueno Bank and oth­er com­pa­nies be­long­ing to Grupo Vázquez, the bank’s par­ent con­glom­er­ate, protest­ed out­side the La­bor Min­istry on Thurs­day, de­mand­ing sev­er­ance and un­paid wages with their jobs in lim­bo and their salaries trapped at the failed bank. A day ear­li­er, hun­dreds of re­tirees, de­pos­i­tors, uni­ver­si­ty stu­dents and work­ers flood­ed the streets of Asun­ción, the cap­i­tal.

“We want your head, Peña!” they shout­ed. Their signs de­mand­ed Peña’s im­peach­ment, called him “the en­e­my of savers” and plead­ed “Give us back our mon­ey.” Ri­ot po­lice fired pep­per spray and rub­ber pel­lets to push back the crowds.

Many demon­stra­tors saw Ueno’s col­lapse not just as the re­sult of risky bank­ing but as a case study in of­fi­cial cor­rup­tion. On­ly Venezuela ranks worse in South Amer­i­ca on the lat­est in­dex of per­ceived cor­rup­tion from Trans­paren­cy In­ter­na­tion­al, a glob­al watch­dog.

“This is yet an­oth­er as­sault on hon­est, hard-work­ing cit­i­zens, peo­ple whose small sav­ings are the fruit of years of la­bor,” said pro­test­er Be­larmi­no Bal­bue­na.

At the na­tion­al sta­di­um that once bore Ueno’s name, the bank’s lo­go had al­ready been scrubbed away. But across the cap­i­tal, fresh graf­fi­ti de­nounced politi­cians as thieves. —ASUN­CIÓN, Paraguay (AP)

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Sto­ry by IS­ABEL DE­BRE and EMILIO SANABRIA | As­so­ci­at­ed Press

Is­abel De­Bre re­port­ed from Buenos Aires, Ar­genti­na. Jorge Sáenz con­tributed to this sto­ry.