Paraguay’s ousted President Santiago Peña faces up to 15 years in prison after a major banking collapse triggered the nation’s political crisis in years.
The swift downfall of the Latin American leader stems from the sudden closure of digital lender Ueno Bank due to solvency concerns. The crisis left millions of customers unable to access their funds and triggered immediate political turmoil.
Following the bank’s collapse, Peña submitted his resignation, but Congress opted instead to impeach him. The former president, an economist and prominent supporter of US President Donald Trump, now faces criminal charges brought by prosecutors alleging a conflict of interest.
Authorities are holding him in pretrial detention at a military facility while the investigation continues.
How the Banking Collapse Unfolded
Paraguay’s central bank voted last Monday to place Ueno Bank into resolution after discovering its solvency ratio had fallen below the required minimum. The following day, central bank officials seized the institution and froze accounts belonging to nearly 2.9 million customers in a country of 6.1 million people.
As protests erupted alongside long lines and growing public anxiety, Peña announced his resignation on Thursday, stating he wanted to give Paraguayans peace of mind and restore stability. Both chambers of Congress convened a joint session to consider the resignation, but lawmakers adjourned without a decision after several members walked out.
Acceptance of the resignation would have granted Peña immunity and special protections. Instead, the lower chamber voted unanimously on Thursday afternoon to impeach him over the financial crisis. The Senate followed by voting to remove him from office on Friday, and Vice President Pedro Alliana was sworn in as president soon after.
Peña Faces Potential 15 Year Sentence for Breach of Trust
Prosecutor Nancy Salomón charged Peña with breach of trust and administration for personal gain, with each charge carrying up to 10 years in prison under Paraguay’s penal code. If found guilty of both, the second conviction is halved, resulting in a potential maximum sentence of 15 years.
Peña denies any wrongdoing. While he held shares in Grupo Vázquez, Ueno Bank’s main shareholder, he sold his stake last year. Prosecutors allege that during his presidency, Peña “intervened in decisions related to the placement, renewal and maintenance of public and pension funds in Ueno Bank, an entity with whose business group he allegedly maintained economic and corporate ties.”
Investigators also claim the bank granted Peña two simultaneous loans in May 2024 totaling $580,000 to finance the construction of his summer home in San Bernardino, located about 50 kilometers from Asunción. On Sunday, authorities executed a search warrant at the property and discovered a highly sophisticated security vault.
Alliana Vows Austerity Following Peña Resignation
Peña was one of Donald Trump’s staunchest allies in Latin America, aligning closely with Washington on regional security and immigration priorities. In response to the resignation announcement, a US State Department spokesperson affirmed the enduring partnership between the two nations.
Succeeding Peña, President Pedro Alliana vowed to govern with “humility, responsibility and a deep commitment to all Paraguayans.” During a ministerial roundtable meeting, Alliana emphasized fiscal discipline, stating on X: “I ordered the ministers of the Executive Branch to work as a team, with austerity and zero tolerance for corruption. The state’s resources belong to the people and must be managed responsibly.”
Jorge Schreiner, approved by Congress as the new president of the central bank to replace Carlos Carvallo, said that officials are working to restore damaged institutional credibility and help depositors recover their savings.
Authorities reported that the government has paid most of Ueno’s customers roughly $330 million from Paraguay’s Deposit Guarantee Fund.
