Paraguay’s President Resigned Over a Banking Collapse That Left Nearly 3 Million People Without Access to Their Money

Paraguay’s political institutions were tested in ways they had not been in years when Ueno Bank, one of the country’s largest financial entities, was seized by the Central Bank and nearly three million customers suddenly found themselves locked out of their accounts. The fallout moved fast. Within days, disgraced President Santiago Peña announced his resignation, the Chamber of Deputies approved an impeachment proceeding against him, and prosecutors had ordered the arrest of eight bank executives. The country’s financial and political crises had become the same crisis.

Peña delivered his resignation through a recorded video message posted to social media on November 5. He had been in office since August 2023, and he framed his departure as a necessary step to preserve institutional stability and social peace. He asked for forgiveness from citizens if he had made errors, and said his priority was protecting the savings of those who had trusted the financial system. His resignation came after Horacio Cartes, the most influential figure in the ruling Colorado Party and Peña’s own political base, threw his support behind the impeachment process, leaving the president without the backing he needed to survive it. Congress still needs to formally accept the resignation or decide whether to proceed with the impeachment. Vice President Pedro Alliana is expected to assume the presidency and complete the term through 2028.

Presenté mi renuncia para evitar más daño al país y contribuir a devolverle la tranquilidad al Paraguay. No quiero que mi presencia sea motivo de mayor división o inestabilidad. Mi responsabilidad es poner al país por encima de mi destino personal.

Hoy nos toca unirnos como paraguayos para reconstruir la institucionalidad y recuperar la confianza. Me despido con gratitud, sin desconocer la angustia de quienes hoy esperan respuestas. Es momento de unir esfuerzos para reconstruir la institucionalidad y atender, con hechos y responsabilidad, a quienes están siendo afectados.

Que Dios bendiga al Paraguay.

— Santiago Peña (@SantiPenap) November 6, 2026

How Ueno Bank Collapsed

The Central Bank of Paraguay initiated resolution proceedings against Ueno on November 2, after determining that the bank’s solvency index had fallen below half of the legally required minimum. The intervention immediately froze branch operations, debit and credit cards, transfers and the bank’s mobile application. Nearly 2.9 million users lost access to their deposits overnight.

The Deposit Guarantee Fund covers up to 228.3 million guaraníes per person per institution, roughly $38,600, a protection that applies to approximately 97 percent of depositors. Those with balances above that threshold are still waiting to find out how much they will recover. Ueno was also managing around $850 million in public funds, including investments from the Social Security Institute, state institutions and resources tied to the Itaipú hydroelectric dam. The Social Security Institute alone had approximately $355 million invested in the bank and was using it to pay retirement benefits to around 32,000 beneficiaries. After the intervention, the institute announced it was transferring its accounts to another bank to maintain those payments.

Prosecutors found evidence of loans extended to companies connected to Ueno’s owners that allegedly exceeded legal limits and lacked sufficient collateral. According to the Associated Press, nearly $39 million was directed to three companies linked to the bank’s owners in a single day in September 2025. An accounting review also found expenses that had been recorded as assets, which reduced the bank’s available capital and pushed its solvency indicator below the legal threshold. Eight executives were arrested, including Miguel Vázquez, founder of the group, and Juan Manuel Gustale, president of the bank. Charges were filed against 27 officials and individuals connected to the bank’s business operations. Opposition Senator Rafael Filizzola described the episode as the largest financial fraud carried out from political power in Paraguay’s democratic era, and said the case could involve up to $3 billion based on information the opposition had gathered.

The Connections That Eroded Public Trust

The collapse did not happen in isolation from the people responsible for overseeing it. Peña had been a shareholder in Ueno Holding, a group of companies connected to the Vázquez business network, until March 2025. He maintained that his investment was in the holding company and denied any direct involvement in the bank itself. Carlos Carvallo Spalding, who resigned from the presidency of the Central Bank amid the scandal, had previously led Financiera Ueno before taking the regulatory role in August 2023. The authorization to transform that financiera into a full bank came in November of the same year.

Orkun Saka, an economist at City St George’s, University of London, described the effect of those overlapping relationships on public confidence in direct terms. “When the president of the Central Bank previously ran the bank he is now supposed to oversee, and the president of the country was a business partner of its owners, that trust breaks,” he said. Paraguay is now working through the institutional and financial aftermath of that breakdown, with a new government taking shape and prosecutors continuing their investigation into how a bank managing billions in public funds reached this point.