Senate Begins Peña Trial After Rejecting His Resignation Amid Ueno Bank Crisis
Key Facts
Paraguay’s Senate began a political trial of President Santiago Peña on November 6, after his resignation was not acted on because a joint session of Congress lacked a quorum, EFE reported. The Chamber of Deputies had voted unanimously on November 5 to impeach him, after he announced his resignation on X, the Associated Press reported. Peña remained formally in office pending a Senate vote, turning the Ueno Bank crisis into a constitutional test for the government’s future. Peña said he would cooperate with investigators, adding that he would act "responsibly and with respect for the constitution" whatever the outcome of the trial. If he is removed from office, Vice President Pedro Alliana will lead the country, the Associated Press reported.
The trial followed the central bank’s November 2 order to begin winding down Ueno Bank, after its solvency ratio fell below 50% of the legal minimum, according to a central bank statement. The central bank said it warned Ueno in June against excessive lending to companies linked to its owners, pointing to regulatory concerns that preceded the start of the wind-down process, the Associated Press reported. The agency estimated the bank held about $800 million in public-sector deposits as of October, equivalent to nearly a quarter of its total deposits. The agency reported that the Labor Ministry estimated about 7,000 direct and indirect jobs at the bank and related companies were affected. Ongoing investigations are examining how the bank was supervised, how its failure was handled and why public funds were deposited there.
The attorney general’s office announced 3 criminal investigations into the Ueno crisis, including allegations involving Peña and current and former government officials, as well as an examination of the bank’s supervision and the handling of its failure, the Associated Press reported. In a parallel judicial proceeding, a court on November 5 ordered 6 bank officials held in pretrial detention, including its founder, Miguel Vázquez, and its president, Juan Manuel Gustale, and placed other officials under house arrest. Prosecutors charged 27 bank officials and associates, the agency reported. The case concerns accountability for lending and oversight decisions, while the investigations and political trial continue in parallel. Peña had earlier canceled a planned trip to an international summit in Spain as the crisis escalated, the Associated Press reported.
The bank’s failure affected depositors. Ueno had about 3 million customers, equivalent to nearly 60% of Paraguay’s adult population, the Associated Press reported. Millions of customers were unable to access their savings after the bank closed, according to the agency. The deposit guarantee fund covers up to 228.3 million guaraníes per person, and the central bank estimated that this limit would cover all deposits held by about 97% of Ueno’s depositors. The central bank began paying guarantees on November 6 to an initial group of customers, up to a maximum of 10 million guaraníes, or $1,565 at that day’s exchange rate, EFE reported. The move puts repayment to customers at the forefront of the immediate response to the crisis.
Accountability is important to Paraguay’s investment reputation, as public funds accounted for nearly a quarter of Ueno’s deposits, the Associated Press reported. Months before the crisis, Moody’s kept the country’s sovereign rating at Baa3, within investment grade, with a stable outlook, according to Paraguay’s Ministry of Economy and Finance. Under Article 189 of the constitution, democratically elected presidents become senators for life, EFE reported. The agency said resignation would have opened that path to Peña, along with immunity, while the constitution excludes those who have faced a political trial and been convicted. The presidency’s fate remains dependent on the outcome of the Senate trial, as deposit guarantee payments begin and criminal investigations continue.