Paraguayan prosecutors have charged impeached former president Santiago Peña with breach of trust and using his office to enrich himself, a day after his dramatic removal from power following the collapse of the digital bank Ueno. The charges, brought Saturday, directly link the ousted leader to a financial crisis that has left millions without access to their savings, according to The New York Times.
The move came as the central bank began paying out the equivalent of $160 million to 1.2 million depositors, though full recovery remains a pressing concern for individuals and businesses.
Allegations of Conflict and Influence at Ueno
The core of the prosecution’s case rests on an alleged conflict of interest. Prosecutors allege that Peña, who remained a shareholder in Ueno’s holding company until March 2025, used his presidential influence to steer public funds to the bank, despite his private ties to the lender. CBC News reported that the charges specifically claim Peña “influenced decisions by government agencies and state-owned entities to keep large amounts of public money deposited at Ueno.” Peña has consistently denied any wrongdoing, stating the bank’s collapse was a matter of regulatory failure.
This relationship deepened after Peña took office in 2023, when Ueno saw a significant influx of public deposits. The bank grew substantially in 2024 after merging with Visión Banco and positioned itself as a major financial player. Fitch Ratings Alejandro Garcia noted Ueno had nearly three million clients, more than any other bank in Paraguay.
Charges Link President to Bank Collapse
- Former President Peña faces charges of breach of trust and personal enrichment, directly linking his office’s power to Ueno Bank’s collapse.
- The crisis exposes systemic risks to Paraguay’s financial stability, threatening its status as an economic outlier in a volatile region.
- While deposit insurance is expected to cover 97% of individual savers, businesses face significant risks with a $38,000 compensation cap.
Bank Seizure Sparks Nationwide Protests
The collapse of Ueno, which served more than half of Paraguay’s adult population with nearly three million clients, triggered a nationwide crisis. The bank’s seizure by the central bank left citizens unable to withdraw cash or make digital payments, sparking widespread protests and public outrage. In response, the central bank began a systematic payout under the state’s deposit guarantee scheme, distributing $159 million to 1.2 million people as of Saturday, with more payments planned over the weekend.
Former central bank president Carlos Carvallo, who resigned Tuesday, attempted to reassure markets, stating that the broader financial system was safe and that clients would get their money back “as soon as possible.” However, analysts have pointed out that the $38,000 compensation limit also applies to companies.
Crisis Threatens Investor Confidence
The demise of Ueno poses a serious threat to Paraguay’s standing as a bastion of economic health in Latin America. The country had been an exception in the region, achieving 6.6% economic growth last year and issuing $350 million in international bonds just this past March. The scandal, however, could tarnish its credibility with international investors and lenders. While ratings agency S&P Global suggested the nation’s economic growth “should remain resilient” due to the limited scope of the failure, the immediate impact on investor confidence is undeniable.
🚨🇵🇾 PARAGUAY’S FORMER PRESIDENT SANTIAGO PEÑA ARRESTED AFTER IMPEACHMENT OVER MAJOR BANKING SCANDAL Paraguay’s former president Santiago Peña has been placed under house arrest following his removal from office by the country’s Senate on Friday, November 6. The Senate voted…
The crisis also concerns regulatory oversight.
| Key Financial Metric | Value | Context |
|---|---|---|
| Deposits Paid Out (Central Bank) | $160 million USD | To 1.2 million of 3 million depositors |
| Compensation Cap | $38,000 | Applies to both individuals and businesses |
| Public Pension Fund at Ueno | ~10% of total | Over $800 million in government funds |
| Paraguay GDP Growth (Last Year) | 6.6% | Among highest in the region |
Senate Votes to Impeach President
The political fallout has been swift and severe. On Friday, senators voted to impeach Peña, with 44 out of 45 senators voting in favour and one absent, removing him from office. His resignation attempt was rejected; senate president Basilio Núñez said Peña had been found guilty of “dereliction of duty.” Vice President Pedro Alliana, a longtime member of the ruling Colorado Party, was sworn in as interim president and promised not to “abandon” the millions of people affected by the scandal. He will serve until 2028.
The road ahead is fraught with legal and economic uncertainty. The charges against Peña could each carry a sentence of up to 10 years, according to the prosecutor. Peña’s defense lawyer, Ricardo Preda, has dismissed the allegations as a “reckless accusation,” but the political and public pressure for accountability remains high. The full extent of the financial damage, particularly for businesses, and the long-term impact on Paraguay’s investment climate are still unfolding.
Analysts say Peña is likely to now be prosecuted over the bank’s collapse, with the key questions centering on the speed and transparency of the recovery process and the new administration’s handling of the crisis.
As Paraguay begins the slow process of rebuilding trust, the Ueno collapse shows the fragility of financial systems and the profound consequences of political corruption. The nation’s economic resilience will now be tested not against regional headwinds, but against the aftershocks of a self-inflicted wound.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
Earlier coverage: Paraguay's Peña Impeached, Arrested After Ueno Bank Collapse
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