Paraguay Congress Refuses Pena's Resignation and Opens Impeachment Over Ueno Bank Collapse

Paraguay's Congress has not accepted President Santiago Pena's resignation over the crisis created by the collapse of the digital lender Ueno Bank. Instead, the legislature has begun impeachment proceedings against him.

On Thursday local time, members of the lower house voted 78-0 in favour of impeachment. The Senate has also begun the impeachment process and summoned the president to appear on Friday.

Pena, a conservative politician, has been president of Paraguay since 2023. He moved to resign on Thursday after millions of Ueno Bank customers were unable to use their bank accounts. In a recorded speech, Pena said he took the decision considering the need to protect the country's stability, social peace and democratic institutions.

However, at the joint session of Congress called to consider his resignation, lawmakers of the Colorado Party walked out, creating a quorum crisis. They left the session after it became clear there were not enough votes in favour of accepting the resignation letter.

Colorado Party leader and former president Horacio Cartes, in a statement on social media, indicated support for Pena's impeachment. He said their party would not take a position in favour of the theft of public, private and pension funds, and called for importance to be given to the people and the values of the Colorado Party.

The refusal to accept Pena's resignation has increased his legal risk. Under Paraguay's rules, a president who leaves office becomes a senator for life and enjoys a certain level of legal immunity as a member of the legislature. But a former president convicted in an impeachment trial does not receive that status.

Earlier this week, Paraguay's central bank said Ueno Bank had failed to maintain the minimum solvency ratio required by law. After the bank's accounts were corrected, it was found that Ueno's capital was less than half of what banks are required to hold to absorb potential losses.

Before its collapse, Ueno Bank claimed it had about 3 million customers in the country of 6.5 million people. After the bank's operations broke down, many customers lost access to the money in their accounts. Many also cannot withdraw pension money that was distributed through the bank.

To handle the situation, Paraguay's central bank has decided to transfer Ueno's remaining funds to other financial institutions. But the central bank itself has also faced criticism for failing to properly supervise the bank's operations. Meanwhile, central bank chief Carlos Carvalho has resigned.

Allegations of a conflict of interest have also been raised against President Pena over the bank. He once held shares in Grupo Vasquez, Ueno Bank's parent company. Pena claims he sold those shares in 2025. Lawmakers have nevertheless questioned his conflict of interest and demanded an examination of whether any institutional effort was made to cover up the bank's financial distress.

Al Jazeera's Latin America editor Lucia Newman said Pena has been accused at least of negligence and of involvement in covering up the bank's bankruptcy. She also said protesters outside Congress are demonstrating demanding that the president's resignation not be accepted, insisting that Pena's trial and impeachment be ensured.

Before its collapse, Ueno Bank had grown rapidly from a small institution into a medium-sized bank. It managed about 850 million dollars in government funds. Paraguay's attorney general has ordered three criminal investigations into the bank's collapse, which will examine the supervision of the bank and the deposit of government funds in it. President Pena has said he will cooperate with investigators.

In his recorded speech on Thursday, Pena said his main expectation was to ensure the return of funds held in the bank, ensure the proper role of the deposit protection fund, and keep the assets of all Paraguayan citizens, including government money, protected. If Pena is ultimately removed from the presidency, Vice President Pedro Alliana could succeed him. However, Ueno Bank has so far made no public statement on its collapse and the ongoing political crisis.