Paraguay President Impeached and Immediately Arrested Amid Banking Crisis - Newsweek
Paraguay’s President Santiago Peña has been impeached and put under house arrest after the collapse of a bank with close ties to his administration left nearly three million people—about 60 percent of the country’s adult population—without access to their money.
Peña had tried to resign on Thursday, a day after the country’s Chamber of Deputies initiated impeachment proceedings and before lawmakers voted unanimously to impeach him.
His resignation could have shielded him from arrest, as democratically elected former Paraguayan presidents become senators for life and generally cannot be detained while in office. But lawmakers refused to accept his resignation, leaving him open to prosecution in the ordinary courts.
Impeachment charges against him accused Peña of conflicts of interest, misuse of pension funds and institutional cover-ups linked to digital lender Ueno, one of the country’s biggest banks.
Minutes after he was impeached on Friday, the ousted president was placed under house arrest at his residence in the capital, Asunción. Prosecutor Silvia González said Peña “voluntarily allowed officers to enter and made himself available for all procedural purposes,” prominent Paraguayan news outlet Radio Ñanduti reported.
He is due to be questioned on Saturday over alleged breach of trust, influence peddling, and misappropriation of funds.
Peña's vice-president, Pedro Alliana, was sworn in as Paraguay’s new leader on Friday. He will serve until the end of the presidential term in August 2028.
Alliana has promised to compensate those affected by Ueno going under. “Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated,” he said after being appointed.
Peña originally acquired around $1 million in shares in 2019 in a company that later became Ueno Holding, the parent company controlling Ueno Bank. After he became president in 2023, his ties to the banks came under growing scrutiny from opposition lawmakers and critics arguing that having an active financial stake in one of the biggest banks in the nation created a clear conflict of interest.
In August of the same year, Peña appointed Carlos Carvallo Spalding, who had been the CEO of Ueno right up until taking the government role, to lead Paraguay’s Central Bank. Months later, Carvallo gave Ueno a license to formally become a conventional retail bank.
The debate was fueled by the growth of Ueno in the years following Peña’s appointment. During his administration, the government relaxed financial regulations, allowing significant amounts of public money to flow into the digital bank.
Until last year, the ousted president still held shares in the bank, which counts approximately three million active clients and an 8 percent share of systemwide bank loans, according to S&P Global. But facing mounting criticism and allegations of a severe conflict of interest, he decided to divest from the bank.
His attempt to distance himself from the company was, however, unsuccessful. Ueno’s collapse became public on Tuesday when Paraguay’s Central Bank officially announced that it was taking control of the company and initiating resolution proceedings. According to the central bank, Ueno’s solvency ratio had fallen below 50 percent of the legally required minimum following internal mismanagement and insider lending.
Ueno’s importance to Paraguay’s society blew up during Peña’s administration. As of last month, the bank held between $800 million and $850 million in public funds, including approximately $380 million belonging to Paraguay's Social Security and Health Institute (IPS).
As of Saturday morning, the bank’s 2.94 million customers remain unable to access their savings and pensions due to the bank’s collapse. They cannot withdraw money or make digital payments. The bank’s collapse prompted protests across the country, with many demanding access to their money.
But the consequences of the bank’s collapse might reach farther than the immediate inability for millions of people to even buy groceries. The political and financial scandal now engulfing the country risks steering investors away from the country, whose economy grew by 6.6 percent in 2025, second only to Guyana in Latin America.
Ueno also sponsored Paraguay’s national soccer team, as well as several other businesses and brands, which will now have to find alternative funding.
In a video statement posted online on Thursday, Peña addressed disgruntled voters: “I want to apologize to the people if I ever failed you. [...] It was never my intention to betray the trust you placed in me.”
