Paraguay president resigns after bank collapse, impeachedWorld

Minutes after the announcement, the lower house voted 78-0 to impeach him and sent the charges to the Senate, which will hear his defence. Vice President Pedro Alliana is expected to take over for the remainder of the term, which runs to 2028, although the formal handover was still pending as the political crisis unfolded.

The crisis was triggered by the collapse of Ueno Bank, a digital lender with roughly three million customers in a country of about 6.5 million people. The central bank seized the lender on 3 November after its solvency ratio fell to 5.56 percent, less than half the 12 percent regulatory minimum.

Ueno held about 800 million dollars in public deposits, including money from state pension and health funds, according to reports. The scale of the failure, touching more than 60 percent of adults in the country, turned a banking failure into a political crisis within days.

A judge ordered six Ueno executives jailed pending trial, including the bank’s founder Miguel Vazquez, while two others were placed under house arrest. Prosecutors have charged 27 bank officials and associates with breach of trust and attempted fraud.

The fallout spread quickly through the economy. The guarani, Paraguay’s currency, fell nearly 4 percent against the US dollar on Thursday and about 7 percent over the week, as savers and markets reacted to the bank’s collapse and the political turmoil.

Peña was elected in April 2023 and took office in August that year, so his resignation comes a little over two years into his five-year term. His departure leaves Paraguay facing both a banking clean-up and a change of government at the same time.

The central bank’s takeover of Ueno was meant to protect depositors, but questions remain about how much of the money will be recovered and how quickly savers will get access to their funds. The authorities have not yet announced a full plan for compensating depositors.

For now, the immediate question is whether the Senate completes the impeachment process and confirms Alliana as president. Until that happens, Paraguay’s leadership remains in flux while the country deals with the largest bank failure in its recent history.

The episode is a reminder of how quickly a financial failure can become a political one when a bank serves a large share of the population. Ueno grew fast by reaching customers that traditional banks had not served, but its collapse has now left millions of Paraguayans waiting for answers about their savings.

Regional governments and financial regulators will be watching how Asuncion handles the clean-up, because the case raises wider questions about the supervision of fast-growing digital lenders across Latin America.