Paraguay President Pena Quits After Bank Collapse Freezes Millions Out

Photo: AFP via Al Jazeera

Paraguay's president has resigned after a bank collapse locked about three million people out of their money. Santiago Pena stepped down on Thursday as lawmakers moved to impeach him and protesters filled the streets of the capital, and his vice president is set to take over.

Pena announced his decision in a recorded video message, saying he was acting "with the stability of our country, social peace and the need to preserve our democratic institutions in mind". Al Jazeera reported that he also said his greatest wish was for depositors' money to be returned and public funds protected.

The crisis began when the central bank seized control of ueno, the country's biggest digital bank, on Tuesday after finding its capital had fallen to less than half the legal minimum. Around three million customers in a country of 6.5 million people suddenly could not reach their accounts, cards or cash machines.

Ueno had grown fast from a small finance firm into a bank holding close to $850 million in public money, including pension and health funds and money from the state hydroelectric dams. Lawmakers accused Pena of conflicts of interest, misuse of pension funds and covering up the bank's troubles. He was once a shareholder in the group that owned the bank, though he sold his shares last year, and he has not admitted any wrongdoing.

The pressure built all week. On Wednesday police used pepper spray and rubber bullets to break up protesters in Asuncion demanding their deposits back. On Thursday Pena lost the backing of members of his own Colorado Party, and the lower house voted unanimously to press ahead with impeachment even after his resignation, with the Senate now due to decide, Reuters reported.

The fallout has already spread. The central bank chief resigned on Tuesday, eight ueno executives have been detained, including the founder and the bank president, and 26 people have been charged over the bank's books, which regulators say counted expenses as assets and made poorly documented loans to firms linked to its owners.

Pena, an ally of US President Donald Trump, took office in August 2023 for a five-year term. Vice President Pedro Alliana is in line to replace him, though Congress must first accept or reject the resignation. The drama caps a wild week for South America, where a youth match in Brazil set a world record with 53 red cards, while Washington has been busy on the foreign front, as US sanctions on firms helping Iran showed this week, and Syria signed a defence deal with Saudi Arabia.

Sources

• Al Jazeera: Paraguay President Pena resigns in wake of bank collapse
• Reuters: Paraguay President Pena resigns under mounting pressure from bank collapse
• CNN: President of Paraguay resigns amid crisis over bank collapse
• Associated Press: Paraguay President Santiago Pena resigns following bank collapse
• Buenos Aires Herald: Santiago Pena resigns as president of Paraguay

All eyes are now on Congress, which must accept the resignation before Vice President Pedro Alliana can be sworn in.

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