Paraguayan President Santiago Peña, an ally of President Donald Trump, is now staring down a Senate impeachment trial. That's what happens when you offer to resign and lawmakers essentially say, "No thanks, we'd rather remove you." The trigger: the collapse of Ueno Bank, which has sparked criminal investigations involving roughly $800 million in public deposits.

Resignation Rejected, Impeachment Unanimous

Peña announced his resignation Thursday, citing "the stability of our country, social peace and the need to preserve our democratic institutions." But Paraguay's lower house voted unanimously to impeach him, and lawmakers rejected his resignation, leaving his political future to the Senate. Prosecutors are investigating authorities' oversight, the lender's failure and the placement of public money.

"Whatever the outcome of this process, I will act with responsibility and respect for the Constitution," Peña wrote in a follow-up post on X. He also apologized, saying, "It was never my intention to betray the trust they placed in me." Opposition legislators argue that accepting his resignation could preserve legal protections associated with a lifetime Senate seat. Peña denies wrongdoing, while Vice President Pedro Alliana would succeed him if lawmakers remove him.

Reuters reported in an explainer on Thursday that Peña previously owned a stake in Grupo Vázquez, the business group linked to Ueno, but said he sold it in March 2025. The crisis also cost him support within his governing Colorado Party and prompted central bank chief Carlos Carvallo, a former executive at Ueno's predecessor, to resign.

Ueno Collapse Freezes Millions Of Customer Accounts

Ueno claimed approximately three million customers and held roughly $800 million in public deposits, including around $380 million from Paraguay's state pension and health fund, according to the Associated Press. Regulators seized the lender after identifying inadequately documented loans to companies connected to its owners and accounting problems that left its capital below half the required minimum.

Authorities detained eight executives, while prosecutors charged 27 bank officials and associates with alleged fraud and breach of trust. A newly approved deposit guarantee aims to reimburse eligible customers, with regulators estimating that about 97% of balances are fully covered.

Banking Crisis Sparks Protests And Financial Turmoil

Depositors and employees protested in Asunción as payment systems stopped working and wages remained inaccessible, the AP report notes. The Labor Ministry estimates that the collapse threatens around 7,000 jobs across Ueno and related businesses.

Paraguay's currency has weakened nearly 7% over the past month, highlighting how the banking failure has become both a political and financial crisis.