Bank collapse takes down Trump ally in Paraguay 

Hind Al Soulia - Riyadh - ASUNCION — Paraguayan President Santiago Peña, a close ally of US President Donald Trump, announced his resignation on Thursday after the collapse of a major commercial bank linked to his government plunged the South American nation into turmoil.

"I want to apologize to the people if at any point I failed," he said in a video message on social media. "It was never my intention to betray the trust you placed in me."

The crisis erupted after Ueno Bank entered an insolvency process, which froze all operations. Lawmakers accused Peña, who was a shareholder until last year in the company that owned the bank, of conflicts of interest and misconduct.

Peña rejected suggestions of impropriety. His resignation came as Paraguay's lower house of congress voted in favour of pursuing an impeachment trial.

Photos taken near Paraguay's Congress building on Thursday show police officers clashing with protesters demanding Peña be removed from office.

Paraguay's congress must approve the resignation of a president. But a special session convened on Thursday to address his resignation was adjourned in favour of continuing with the impeachment process.

Congress has scheduled a special session for Friday, when Peña is expected to present his defence, according to Reuters news agency.

In a post on X, Peña confirmed he would appear for Senate impeachment proceedings, adding that he would do so to "exercise my right to a defence".

He wrote: "I will provide the information requested of me. Citizens deserve to know the truth, without cover-ups and without anyone being above the law."

Peña earlier said his resignation was to protect stability, social peace and democratic institutions.

Ueno Bank has said it has about three million customers, equivalent to about 60% of Paraguay's adult population.

It held pensions and some other public funds and, after its collapse earlier this week, millions could not access their accounts.

The impact was immediate and set off an unprecedented political earthquake. Since Tuesday, crowds of angry customers have gathered around the bank's headquarters in Asunción and 75 branches across the country in an attempt to save their money.

The scene outside the branches, closed and guarded, has turned into one of extreme tension and desperation. The distress in front of the branches translated into daily emergencies that quickly became unsustainable.

Some people, in tears, begged to withdraw their money to pay for medicine for a seriously ill child; a few kilometres away, a construction worker was just as desperate when he realised that, without access to his savings, he would not even be able to buy food for his children that day.

The central bank seized the digital lender, and people took to the streets protesting and demanding Peña's resignation.

It was of no use that the authorities tried to calm tempers by reminding people that the law provides for a guarantee fund to reimburse each client up to 75 minimum wages (around 228 million guaraníes or 37,700 dollars) — mistrust and suspicion had already taken hold on the streets.

"Who will answer for a lifetime of savings? Will there be impunity?" read the placards held by demonstrators standing their ground outside the bank's offices.

A new president of the Central Bank of Paraguay has been appointed and Congress has approved a process to pay depositors.

Peña won the election in 2023 representing Paraguay's ruling conservative Colorado Party, beating a centre-left challenger.

The Colorado party dropped impeachment proceedings against Vice President Pedro Alliana, who is next in line for the presidency after Peña.