The Paraguayan Senate unanimously impeached and removed President Santiago Peña on Friday, following the collapse of Ueno Bank, a crisis that has frozen the savings of nearly three million people and triggered widespread political unrest.
Prosecutors issued an arrest warrant for Peña shortly after his removal, ordering him to be held under house arrest until he can appear before a specialist unit for economic crime and corruption. According to an Associated Press report, the order directs police to detain him at his home. Vice President Pedro Alliana was sworn in as the country’s new president later that day, taking over the remainder of the term which runs until August 2028.
Impeachment and the loss of immunity
The Senate’s decision to proceed with impeachment rather than accepting a resignation offered by Peña on Thursday was a strategic move by lawmakers to ensure he remained subject to criminal proceedings. Mandurah Mail reports that had Congress accepted his resignation, Peña would have acquired the status of senator for life, granting him parliamentary immunity.
Peña did not attend the Senate trial, despite a prior pledge to defend himself. His legal team challenged the proceedings, arguing that the president had been denied sufficient time to prepare a defense after he unsuccessfully requested a 72-hour postponement. Geo notes that senators rejected his request by a vote of 39 to three.
BREAKING: Paraguay's Senate votes to remove President Santiago Peña from office following the Ueno bank collapse. https://t.co/0TLZgj5w6e
The impeachment charges alleged that Peña had conflicts of interest, manipulated regulatory oversight, diverted pension funds, and participated in an institutional cover-up involving the central bank. While Peña has denied any wrongdoing, characterizing the situation as a regulatory issue, Mediafax reports that the Senate found him guilty of failing to fulfill his official duties.
Ueno Bank collapse and frozen assets
The political crisis was precipitated by the central bank’s intervention in Ueno Bank earlier this week. The digital-first lender, which had grown rapidly since its launch in 2021, saw its capital adequacy ratio fall below half of the required minimum, leading regulators to seize control and freeze the accounts of nearly three million customers.
The collapse has left many citizens unable to access their savings or pensions. Geo reports that the bank had served many individuals who previously lacked access to traditional banking services.
The government has initiated a phased compensation plan for affected depositors. The central bank has announced the beginning of payments to depositors, though millions of customers do not yet have access to all the funds in their accounts.
Investigations into political and financial ties
Prosecutors are investigating whether Peña used his political influence to direct hundreds of millions of dollars in public funds into Ueno. An Associated Press report indicates that lawmakers accused him of steering funds into the bank while regulators overlooked risky insider lending. Peña had maintained business ties with Grupo Vazquez, the conglomerate that controlled Ueno, until March 2025.
The investigation has also targeted the central bank and other high-ranking officials. An arrest warrant was issued for former central bank chief Carlos Carvallo, who resigned earlier this week. Carlos Carvallo had headed Ueno until 2023. Several members of Peña's inner circle have resigned, including the interior minister, the chief of staff, and two advisers.
Ousted Paraguayan President Santiago Peña is under house arrest on suspicion of breach of trust. He was detained shortly after the Senate removed him from office following a bank collapse. https://t.co/EXWR8dAi2V
Earlier coverage: Amnesty International Calls on Paraguay to Protect Rights in Financial Crisis
