Paraguay’s President Santiago Peña has resigned after a banking scandal wiped out access to savings for millions of customers, triggered mass protests and threatened to bring down his government.
The crisis erupted after the country’s central bank placed Ueno Bank under resolution over insolvency on Monday, freezing deposits belonging to about three million customers and leaving hundreds of thousands of families unable to access money for food and other daily necessities.
Ueno Bank had grown from a little-known digital lender into one of Paraguay’s biggest financial institutions within a few years of Peña taking power in August 2023.
The bank claimed to have about 60 percent of the country’s adult population as customers, but its rapid expansion is now at the centre of a major political and financial scandal.
The institution held between US$800 million and US$850 million in deposits from state institutions and pension entities, including retirement funds.
Its financial troubles have raised questions about how public money ended up in a bank linked to the president’s former business interests.
Peña previously held shares in Ueno Holding, the conglomerate behind the bank, although he said he had sold all his shares.
He defended his involvement as an investment and dismissed media reports suggesting improper favouritism as a campaign intended to weaken his government.
The bank began as a finance company in the 1970s before being acquired by Grupo Vázquez, one of Paraguay’s largest business and industrial groups, in 2021. It received authorization from the central bank to operate as a digital bank at the end of 2023, under Peña’s administration. Its aggressive expansion included cashback offers on groceries and sponsorship of Paraguay’s national football team.
The collapse sparked public anger, with bank executives arrested and thousands of people taking to the streets. Paraguay’s national football team also joined the pressure, issuing a letter on Wednesday demanding a strong response from the government and the justice system.
Political pressure intensified when opposition lawmakers and members of Peña’s own Colorado Party filed an impeachment motion on Wednesday, holding him responsible for the scandal.
Former president Horacio Cartes, once a close ally, also backed the move, accusing those involved of allowing public, private and pensioners’ funds to be stolen.
Peña announced his resignation in a video message on Thursday, saying he had decided to put the country’s stability and democratic institutions ahead of his personal position. The 47-year-old economist also apologised to Paraguayans if he had failed them and said his priority was ensuring that people who trusted the financial system could recover their savings.
Opposition senator Rafael Filizzola described the scandal as the biggest fraud committed through political power during Paraguay’s democratic era, accusing the government of using public money to support private businesses connected to powerful political figures.
Peña, a former finance minister who had promised to rebuild a great Paraguay, had also enjoyed close relations with United States President Donald Trump.
He attended Trump’s second inauguration and was repeatedly praised by US officials, including Secretary of State Marco Rubio, as a strategic partner. Neither Trump nor Rubio had commented on his resignation at the time of the report.
About an hour after Peña announced his departure, Paraguay’s lower house unanimously approved the impeachment motion, sending it to the Senate.
His resignation must still be accepted by Congress, after which Vice-President Pedro Alliana is expected to take over. However, Alliana has also faced allegations of involvement in the Ueno Bank scandal, which he denies.
The impeachment process could still have consequences for Peña even after his resignation. If approved by the Senate, he would lose his seat in the legislature and parliamentary immunity, potentially exposing him to criminal proceedings in ordinary courts.
Source: The Guardian
The crisis erupted after the country’s central bank placed Ueno Bank under resolution over insolvency on Monday, freezing deposits belonging to about three million customers and leaving hundreds of thousands of families unable to access money for food and other daily necessities.
Ueno Bank had grown from a little-known digital lender into one of Paraguay’s biggest financial institutions within a few years of Peña taking power in August 2023.
The bank claimed to have about 60 percent of the country’s adult population as customers, but its rapid expansion is now at the centre of a major political and financial scandal.
The institution held between US$800 million and US$850 million in deposits from state institutions and pension entities, including retirement funds.
Its financial troubles have raised questions about how public money ended up in a bank linked to the president’s former business interests.
Peña previously held shares in Ueno Holding, the conglomerate behind the bank, although he said he had sold all his shares.
He defended his involvement as an investment and dismissed media reports suggesting improper favouritism as a campaign intended to weaken his government.
The bank began as a finance company in the 1970s before being acquired by Grupo Vázquez, one of Paraguay’s largest business and industrial groups, in 2021. It received authorization from the central bank to operate as a digital bank at the end of 2023, under Peña’s administration. Its aggressive expansion included cashback offers on groceries and sponsorship of Paraguay’s national football team.
The collapse sparked public anger, with bank executives arrested and thousands of people taking to the streets. Paraguay’s national football team also joined the pressure, issuing a letter on Wednesday demanding a strong response from the government and the justice system.
Political pressure intensified when opposition lawmakers and members of Peña’s own Colorado Party filed an impeachment motion on Wednesday, holding him responsible for the scandal.
Former president Horacio Cartes, once a close ally, also backed the move, accusing those involved of allowing public, private and pensioners’ funds to be stolen.
Peña announced his resignation in a video message on Thursday, saying he had decided to put the country’s stability and democratic institutions ahead of his personal position. The 47-year-old economist also apologised to Paraguayans if he had failed them and said his priority was ensuring that people who trusted the financial system could recover their savings.
Opposition senator Rafael Filizzola described the scandal as the biggest fraud committed through political power during Paraguay’s democratic era, accusing the government of using public money to support private businesses connected to powerful political figures.
Peña, a former finance minister who had promised to rebuild a great Paraguay, had also enjoyed close relations with United States President Donald Trump.
He attended Trump’s second inauguration and was repeatedly praised by US officials, including Secretary of State Marco Rubio, as a strategic partner. Neither Trump nor Rubio had commented on his resignation at the time of the report.
About an hour after Peña announced his departure, Paraguay’s lower house unanimously approved the impeachment motion, sending it to the Senate.
His resignation must still be accepted by Congress, after which Vice-President Pedro Alliana is expected to take over. However, Alliana has also faced allegations of involvement in the Ueno Bank scandal, which he denies.
The impeachment process could still have consequences for Peña even after his resignation. If approved by the Senate, he would lose his seat in the legislature and parliamentary immunity, potentially exposing him to criminal proceedings in ordinary courts.
Source: The Guardian
