Paraguay president resigns after Ueno bank crisis

Paraguayan President Santiago Pena resigned after a banking crisis at Ueno Bank blocked nearly half the country's population from accessing their money and triggered protests around the country.

The Central Bank seized control of Ueno on Tuesday, citing a severe capital shortfall and saying the move was needed to protect depositors and preserve financial stability. Ueno says it has more than three million customers in Paraguay, which has a population of 6.4 million, and manages millions of dollars in pensions and other state funds.

Authorities issued arrest warrants for eight of Ueno's top executives. The bank's president, Miguel Vazquez, turned himself in to police. Central Bank president Carlos Carvallo, a former Ueno chair, resigned at Pena's request.

Pena, who took office in 2023, previously owned shares in a group that controlled Ueno, but sold them last year.

Pena enacted a law on Wednesday to return most deposits within five days. Thirty-five lawmakers filed a motion to impeach him and Vice President Pedro Alliana, accusing Pena of a conflict of interest and of favouring Ueno through regulatory decisions and the placement of pension funds.

Protests continued in Asuncion on Wednesday evening, with depositors demanding their money back and some demonstrators calling for impeachment. Some protesters clashed with police, who used tear gas and water cannons.

On Thursday, Pena's Colorado Party turned against him when party leader Horacio Cartes backed impeachment. The Chamber of Deputies had opened a session to debate the motion when Pena posted a video on X announcing his resignation.

Minutes later, the 78 deputies present unanimously approved the impeachment motion against Pena. In a second session, the chamber rejected a request to impeach Alliana by 48 votes to 30.

Both chambers of Congress must decide whether to accept or reject Pena's resignation. If they reject it, a Senate trial would decide his liability in the scandal. If the presidency is declared vacant, Alliana must complete the term through 2028.