Peña steps down as Paraguay reels from bank collapse and impeachment push

Santiago Peña has stepped down from the Paraguayan presidency on Thursday, November 5, as the country grapples with the fallout from a major banking failure and mounting calls for his removal from office.

The 47-year-old leader, whose term began in August 2023 and was meant to extend to 2028, cited the need to safeguard national stability, maintain social harmony and protect democratic institutions. In a video address, he expressed regret if his leadership had disappointed Paraguayans and underscored his commitment to helping those affected by the banking turmoil recover their funds.

"I have made the decision to submit my resignation from the Presidency of the Republic," Peña said.

His exit came as legislators prepared to pursue impeachment. The Chamber of Deputies voted unanimously to advance the impeachment motion on Thursday, hours after Peña's announcement, with the matter heading to the Senate.

The banking crisis

Ueno Bank, a fast-growing digital lender, had become a major financial player, serving roughly 2.9 million customers across a nation of 6.5 million people. Paraguay's Central Bank moved to take over the institution after its solvency ratio dropped below the legal floor, forcing closure and trapping depositors' money.

The failed bank held between US$800 million and US$850 million in government money, funds belonging to state bodies and pension schemes. The collapse has raised alarm about the strength of financial regulation and how public money was managed.

Peña's ties to Grupo Vázquez, the conglomerate linked to Ueno Bank, fuelled the crisis. He has stated he divested his stake in March 2025 and rejected claims of misconduct. Opposition figures, however, argued his earlier financial stake posed a conflict of interest and contended his government had ignored red flags about the bank's health.

Eight bank officials and board members face arrest orders as prosecutors investigate.

Political fallout

Support crumbled when fellow members of Peña's Colorado Party, a conservative force that has long dominated Paraguayan politics, switched sides. Horacio Cartes, a former president, openly endorsed impeachment.

Street protests erupted in Asunción, with crowds demanding answers about frozen savings. Riot police deployed tear gas and water cannons to break up the gatherings.

Financial markets reacted sharply: the currency lost value against the dollar and government bond prices fell.

Vice President Pedro Alliana stands to assume office if Congress formalises the resignation. Alliana has recently distanced himself from Peña and put aside his own political plans during the turmoil.

The crisis represents a major blow to the Colorado Party's long grip on power. Peru's government has indicated it is watching closely and urged Paraguay to uphold its constitution and democratic rules during the transition.