Paraguay’s President Santiago Pena resigned after regulators seized Ueno Bank over risky lending, triggering protests, depositor panic and an impeachment debate.

Paraguayan President Santiago Pena resigned Thursday, days after the nation’s central bank seized Ueno Bank, a major digital lender with close ties to his government.

Pena announced his resignation in a video posted to X, saying he was stepping down to preserve the country’s stability and democratic institutions as massive protests rocked the capital, Asuncion, for a third day and lawmakers debated the president’s impeachment. 

“I have made the decision to submit my resignation as president of the republic,” said Pena, 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.” 

Pena offered an apology but stopped short of accepting responsibility for the banking crisis. 

“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, a major digital lender, went from an obscure finance company to a household name in less than five years, claimed more than 60% of Paraguay’s adults as customers. 

The political upheaval and promises of relief leave a bigger question unanswered: 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. 

For many Paraguayans, the answer lies in the uncomfortable proximity of Pena’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 Pena 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.” 

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 Pena. 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 Colour, 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. 

Pena 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. 

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, fuelling 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 Pena’s request. 

Authorities have detained eight senior Ueno executives, including founder Miguel Vazquez 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. 

Hundreds of employees of Ueno Bank and other companies belonging to Grupo Vazquez, 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 Asuncion, the capital. 

“We want your head, Pena!” they shouted. Their signs demanded Pena’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 labour,” 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.