Embattled Paraguayan President Santiago Pena resigned Thursday amid allegations he mishandled the collapse of digital lender Ueno Bank and a day after opposition members filed articles of impeachment against him.
Paraguay’s central bank seized control of Ueno Bank this week after an investigation found unauthorized related-party lending and a major capital shortfall that caused the company’s solvency ratio to fall well below the legally required minimum.
The move left nearly 3 million customers in Paraguay without access to their accounts and sparked major concerns about the country’s financial systems.
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Ueno Bank evolved over the past few years from a relatively small fintech platform into one of the more popular banks used by consumers in Paraguay. Prior to the collapse, the bank was administering close to $850 million in public funds.
Mr. Pena’s resignation comes less than a day after a group of 35 lawmakers submitted articles of impeachment to Congress and demanded floor debate on Thursday.
Removal from office would have required 53 out of the 80 seats in the Paraguayan government’s lower house and 30 out of the 45 Senate seats. The ruling party, the conservative Colorado Party, holds a majority in both houses.
But Colorado Party leader Horacio Cartes said Thursday that he backed impeachment, which may have accelerated Mr. Pena’s choice to leave office.
Opposition lawmakers, made up mostly of members of the Authentic Radical Liberal Party, have accused Mr. Pena of mishandling the collapse of the bank due to a conflict of interest. Mr. Pena was a shareholder in Grupo Vazquez, the firm that owned Ueno Bank, up until last March.
Mr. Pena’s resignation puts Vice President Pedro Alliana next in line for the job, but the opposition’s impeachment proceedings also targeted Mr. Alliana.
Mr. Alliana had also paused his bid to take over the presidency in 2028 earlier this year, making his ambitions for the job, especially with severe opposition in Congress, unclear.
Mr. Pena has apologized for the devastating impact that the bank’s closure has had on the lives of millions of people in Paraguay but has stopped short of accepting direct responsibility and has denied any wrongdoing.
The scandal has already rocked Paraguay’s federal financial institutions, with central bank head Carlos Carvallo Spalding resigning this week.
Also, the heads of Ueno Bank turned themselves in to federal law enforcement this week.
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