Paraguay's President Santiago Peña resigned on Thursday following a political crisis sparked by the collapse of digital lender Ueno Bank, which left millions of customers unable to access their accounts.

In a video address posted on social media, Peña said he was stepping down to protect the country's stability and democratic institutions. "I do so with the stability of our country, social peace and the need to preserve our democratic institutions in mind," he said.

He also issued an apology to the public. "I want to apologise to the people if at any point I failed," he said. "It was never my intention to betray the trust you placed in me."

The resignation came one day after opposition lawmakers requested his impeachment and called an extraordinary congressional session to begin formal proceedings. Paraguay's lower house of congress had voted in favour of pursuing an impeachment trial.

Peña also lost the backing of members of his own conservative Colorado Party earlier on Thursday. Vice President Pedro Alliana is set to take office as his replacement.

Lawmakers had accused Peña of conflicts of interest, misuse of pension funds, and institutional cover-ups linked to the collapse of Ueno. He had been a shareholder until last year in the company that owned the bank.

Ueno had grown rapidly from a niche fintech player into a mid-tier bank, administering close to 850 million dollars in public funds, including pensions. When the bank entered insolvency and froze all operations this week, millions of customers were unable to access their accounts.

The collapse triggered street protests, with demonstrators demanding Peña's resignation.

Peña won the presidency in 2023 representing the ruling conservative Colorado Party. He had been described as an ally of US President Donald Trump.