Paraguay Senate to Decide Fate of Resigning President Santiago Peña

The lower house of the Paraguayan Congress voted 78 to 0 on Thursday to impeach President Santiago Peña, a decision made only minutes after he announced his resignation. The vote sends impeachment charges to the Senate, where a two-thirds majority is required to formally remove the president from office. This action follows three days of intense demonstrations in the capital, Asunción, triggered by the sudden failure of Ueno Bank, a major digital lender closely tied to Peña's administration.

Peña, who has been a close ally of U.S. President Donald Trump, posted a video to social media while lawmakers debated his impeachment. He stated that he was stepping down to preserve the stability of the country and its democratic institutions. Until last year, Peña held a financial stake in the company that serves as Ueno Bank's holding parent. He expressed regret for any failures but did not fully accept responsibility for the banking crisis that has disrupted the nation's economy.

The collapse of Ueno Bank has stranded millions of people who used the service for savings, wages, and pensions. The bank claimed more than 60 percent of Paraguay’s adults as customers before its failure. Approximately 7,000 employees are now without pay, and depositors are scrambling to recover their funds. The central bank seized the institution on Tuesday after determining that its capital had fallen below the legal minimum following the discovery of risky lending practices and misreported assets.

Ueno Bank grew rapidly after receiving its banking license in 2023, expanding from a small finance company to a nationwide presence with more than 70 locations. The bank sponsored the national soccer team and named the country's main stadium. Government funds, including money from state pension and health funds, were deposited with Ueno, which reported holding roughly $800 million in public deposits as of last month. Critics point to the influence of the ruling Colorado Party, which controlled both the executive branch and the central bank, where Carlos Carvallo served as president before his resignation on Wednesday.

Central bank inspectors had flagged concerns in June about loans extended to companies linked to Ueno’s owners. These loans often exceeded legal limits and lacked sufficient collateral. In September 2025 alone, nearly $39 million in loans went to three such entities. Despite these findings, Peña defended the bank and dismissed regulatory warnings as a smear campaign. The crisis erupted on Monday when regulators identified poorly documented loans and expenses wrongly counted as assets, leading to the seizure of the bank on Tuesday.

Vice President Pedro Alliana is expected to be sworn in as president at 6 p.m. on Thursday, one hour after Congress formally accepts Peña’s resignation. Alliana will serve until August 2028, and lawmakers will select a new vice president. On the streets, protests continued for a third day, with hundreds of retirees, students, and workers marching through Asunción. Demonstrators chanted for Peña's removal and accused politicians of stealing public funds. Riot police used pepper spray and rubber pellets to manage the crowds.

Authorities have detained eight senior Ueno executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale. Prosecutors have charged 27 bank officials and business associates with offenses such as breach of trust and attempted fraud. Officials have begun the process of reopening accounts for approximately 280,000 customers who banked exclusively with Ueno. Pedro Acosta Bernal, the interim central bank president, stated that the broader banking system remains sound while repaying depositors.