Paraguay is living through the most dramatic week in its recent political history. President Santiago Peña, who announced his resignation on Thursday over the collapse of the country’s largest digital bank, will instead defend himself in an impeachment trial in the Senate on Friday — a trial that could end with his removal from office the same day.
The crisis has moved with extraordinary speed. In less than a week, regulators have seized Ueno Bank, freezing the accounts of nearly three million customers in a country of just 6.1 million people; prosecutors have charged 27 people; the lower house of Congress has voted unanimously to impeach the president; and the president’s own governing party has turned against him.
Peña denies wrongdoing and says he will answer the charges “with arguments and evidence.” But with his resignation rejected by Congress and a Senate trial now under way, the 47-year-old president’s political survival hangs on a vote that requires 30 of the Senate’s 45 members to remove him.
How Ueno Bank collapsed
Ueno Bank was Paraguay’s largest digital lender, with about 2.9 million customers — close to half the population of the small South American country. Its collapse began when regulators discovered that the bank’s finances were far weaker than they appeared.
On Monday, November 2, the board of the Central Bank of Paraguay voted unanimously to place Ueno in resolution, taking control of the bank the following day. Officials found that its solvency ratio had fallen to 5.56 percent, against a legal minimum of 12 percent — less than half of what the law requires. A review of the bank’s books uncovered poorly documented loans and expenses that had been incorrectly counted as assets, according to the Associated Press.
The intervention froze the accounts of a bank that held about $800 million in public deposits in October, equivalent to nearly a quarter of its total deposits. That public money included funds from the government pension and health fund and from hydroelectric dam operators, raising questions about how state money ended up in a failing private bank and who approved the deposits.
For ordinary savers, the consequences were immediate. The bank’s app, cards and branches were shut down, leaving customers unable to withdraw or transfer their money. Protesters gathered in the capital, Asunción, demanding their savings back and calling for Peña’s removal.
The political fallout reached the central bank itself. Its president, Carlos Carvallo, resigned on Tuesday at Peña’s request, although he agreed to stay temporarily to oversee the transition. Peña has promised to repay 98 percent of depositors under an emergency law, with payment instructions due to begin on Thursday — a promise millions of anxious savers will now be watching closely.
A resignation that never took effect
Thursday brought one of the strangest days in Paraguayan political history. Peña announced his resignation in a pre-recorded video message posted on X, saying he was stepping down over the Ueno Bank crisis.
Almost at the same moment, the Chamber of Deputies voted 78-0 to approve impeachment charges against him and send the case to the Senate. The charges had been filed by 35 opposition and dissident ruling-party deputies, and even Peña’s own Colorado Party backed the proceedings. Former President Horacio Cartes, who leads the governing party and mentored Peña, endorsed the impeachment — a decisive break between the president and the political machine that put him in power.
But the resignation never took effect. A joint session of both chambers of Congress, convened to rule on the resignation, ended without a quorum after Colorado Party senators walked out. Without a quorum, the resignation could not be accepted, and Peña remained in office.
Hours later, Peña said on X that he would face the trial. “Given that the impeachment trial is continuing, I will appear and exercise my right to a defense. I will do so with arguments and evidence, with respect for the Constitution and the institutions of the Republic,” he wrote.
The Senate opened the trial on Thursday night. Deputies serving as prosecutors presented the charges, and Peña was summoned to present his defense on Friday at 10 a.m. Senate officials said the trial could conclude the same day. Removal requires the votes of 30 of the 45 senators.
In a separate vote on Thursday, the Chamber of Deputies rejected an impeachment request against Vice President Pedro Alliana, by 48 votes to 30, clearing his path to the presidency if Peña is removed. Alliana would serve until August 2028.
Opposition senators are pressing for removal rather than letting the resignation stand. According to the Associated Press, they argue that resigning would allow Peña to claim a lifetime Senate seat whose legal protections might stop him from being prosecuted.
The criminal cases
The impeachment trial is only one of the legal tracks now running against the president and the bank. Attorney General Emiliano Rolón Fernández has ordered three criminal investigations, covering allegations involving Peña and other current and former officials, the supervision of the bank and the handling of its collapse, and the deposit of public funds with the institution. A criminal complaint against Peña has been referred to the anti-corruption unit investigating the case.
The cases against the bank’s leadership are further advanced. Prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud. A judge on Thursday ordered six Ueno executives held in pretrial detention, including founder Miguel Vázquez and bank president Juan Manuel Gustale. Two other officials were placed under house arrest.
Courts have also ordered preventive seizures of $70 million and 1.62 trillion guaraníes in assets belonging to directors and shareholder companies, as investigators trace where the bank’s money went.
These are allegations, not findings, and Peña denies wrongdoing. But the BBC reported that Peña was until last year a shareholder in the firm that owned the bank — a connection his critics say explains why regulators and the government were slow to act. The Association of Evangelical Churches of Paraguay has expressed solidarity with affected savers and called for an investigation into those responsible and anyone who may have covered for them.
What happens next in the Senate
All eyes are now on Friday’s session. Peña will present his defense in the morning, senators will debate the charges, and a vote could follow within hours. The arithmetic is unforgiving: 30 of 45 senators must vote to remove him, and the unanimous vote in the lower house — backed by his own party — suggests the numbers may be there.
If Peña is removed, Vice President Pedro Alliana will be sworn in and serve out the term until August 2028. If he survives, he will return to office as a badly weakened president, with his party split, criminal investigations continuing, and millions of depositors still waiting for their money.
Either way, the coming days will bring more answers. The first depositor repayments are due to begin, the criminal cases against the bank’s executives will move toward trial, and investigators will keep digging into how public funds were deposited in Ueno and who knew the bank was in trouble.
Why this matters beyond Paraguay
The crisis is about more than one president or one bank. Ueno served close to half of Paraguay’s population, and its collapse has shaken confidence in digital banking across a region where millions of people have only recently gained access to financial services through their phones.
It is also a striking test of democratic institutions. Within days of the bank’s seizure, Paraguay’s central bank, prosecutors, courts and Congress have all acted — and the governing party itself has moved against its own president. That speed, and the cross-party nature of the impeachment vote, sets the episode apart from the slower-moving political crises that have toppled presidents elsewhere in Latin America.
For Paraguay’s neighbors and for investors, the question now is whether the country can resolve the crisis cleanly: repay depositors, hold those responsible to account, and complete a constitutional transfer of power without prolonged instability. The answer will begin to emerge on Friday, when the Senate decides Santiago Peña’s fate.
What to watch
The Senate session on Friday is the decisive moment. Watch for the result of the vote, whether Alliana is sworn in as president, and how quickly the government begins repaying Ueno’s depositors. Beyond that, the criminal investigations ordered by the attorney general — and what they reveal about the bank’s supervision and the public money it held — will shape Paraguayan politics long after this week is over.