Paraguay's President Resigns Amid Bank Collapse

Paraguayan President Santiago Peña resigned on Thursday following the collapse of Ueno Bank, a digital lender closely linked to his government. The bank's failure froze the savings of millions of citizens and sparked widespread protests across the capital, Asunción. The political crisis forced Peña to abandon his post just weeks after the United States welcomed him as a key ally.

The collapse turned the long-ruling Colorado Party against its leader. Minutes after Peña announced his resignation in a video posted to social media, the lower house of Congress voted 78-0 to impeach him. Congressional leaders are expected to accept the resignation later on Thursday. This move would allow Vice President Pedro Alliana to be sworn in immediately, bypassing a Senate trial that opposition senators were still demanding.

Peña stated in his farewell video that he was stepping down to ensure the stability of the country and to preserve democratic institutions. He expressed contrition for the turmoil but stopped short of accepting full responsibility for the bank's rapid expansion and subsequent failure. Horacio Cartes, a former president and the current leader of the Colorado Party, backed the impeachment. Cartes said the party would not support the plundering of public and private funds.

Ueno Bank grew from an obscure finance company to a major lender in less than five years. The bank claimed more than 60% of Paraguay's adults as customers. It reported holding roughly $800 million in public deposits as of last month. These funds included money from the state pension fund, the health fund, and operators of the country's hydroelectric dams. The central bank had warned about risky lending practices to insiders as early as June.

The central bank seized Ueno Bank on Tuesday after inspectors found poorly documented loans to companies linked to the bank's owners. The bank's capital fell to less than half the legal minimum. Regulators also identified expenses that the bank had wrongly counted as assets. The seizure led to a freeze in deposits, causing the bank's app and cards to stop working. Long lines formed outside branches as customers attempted to access their funds.

The economic impact has been immediate. The guaraní, Paraguay's currency, fell nearly 4% against the U.S. dollar on Thursday. This drop brings the currency's loss for the week to nearly 7%. The Labor Ministry estimates that the collapse has affected approximately 7,000 direct and indirect jobs. Employees of the bank have protested outside the Labor Ministry, demanding severance pay and unpaid wages.

A judge ordered six Ueno executives jailed pending trial on Thursday. The group includes founder Miguel Vázquez and bank President Juan Manuel Gustale. Two other executives were placed under house arrest. Prosecutors charged 27 officials and associates with breach of trust and attempted fraud. They allege the bank made large loans to related companies without adequate guarantees and diverted funds to other group businesses.