Paraguay crisis deepens as Santiago Pena is impeached, arrested and Pedro Alliana takes over

Paraguay's political and financial crisis deepened on Friday after Congress impeached President Santiago Pena and authorities placed him under house arrest. Senators then appointed Pedro Alliana, the former vice president, as president shortly after the vote, marking a rapid transfer of power in the capital. The move followed the collapse of Uneo Bank, which left almost half the country unable to access their accounts and triggered public anger across the country.

Senate President Basilio Nunez said Mr Pena was found guilty of poor performance in his duties after 44 of 45 senators voted for impeachment, with one absent. Prosecutor Silvia Margarita Gonzalez Vester said the former president was placed under house arrest minutes after his removal. The new president promised that the nearly three million depositors affected by the banking crisis, including pensioners, would be fully compensated, while advance payments to some impacted customers began on Thursday afternoon, according to a Central Bank official.

The crisis has combined a leadership change with a major banking shock and allegations of conflict of interest. The supplied material says Mr Pena had links to Uneo Bank through his former stake in Grupo Vazquez, which controlled the lender, and that opposition politicians accused him of a conflict of interest. The Attorney General has opened an investigation into acts related to the supervision and resolution of Uneo Bank S.A., adding a criminal dimension to the political fallout.

Opposition lawmakers also tried to impeach Mr Alliana over the crisis, but that motion failed to gain congressional approval. The banking collapse matters because it has affected a very large share of the population and shaken confidence in Paraguay's financial system. The supplied report says almost three million depositors were affected, including people who could not access money for everyday spending.

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That scale of disruption helps explain why hundreds of people gathered outside Congress to celebrate the impeachment and why thousands took to the streets demanding consequences. The case also highlights the pressure on Paraguay's institutions to respond to both financial instability and allegations of political influence. Mr Pena had offered his resignation, but lawmakers pressed ahead with impeachment proceedings that stripped him of political immunity.

The central bank's deposit guarantee fund has said the first phase of payments will go to clients without loans who have accounts at another bank or institution in Paraguay, with later beneficiaries to be announced progressively. What remains unclear is how quickly the compensation process will reach all affected depositors and how far the investigation into Uneo Bank and Mr Pena will go. It is also not yet clear whether the former president will face further detention or formal charges beyond the house arrest order.

The next developments are likely to focus on the criminal inquiry, the handling of the bank's remaining liabilities and whether the new administration can restore confidence in the financial system.

Paraguay's political crisis escalated on Friday after Congress impeached President Santiago Pena and authorities placed him under house arrest. The move came minutes after lawmakers completed proceedings in the capital, while protesters gathered outside and clashes with police were reported in parts of the country. Vice-president Pedro Alliana was being sworn in as the new leader as the transfer of power unfolded.

A public prosecutor said Pena was inside his home and had voluntarily allowed officers to enter, adding that he was available for procedural steps. Prosecutor Elena Fiore Franco said the former president was under house arrest after the impeachment vote. The public prosecutor's office had already opened an investigation on Thursday into allegations of illicit enrichment, money laundering and influence peddling.

The case is tied to the suspension of Ueno bank, which left about 2.9 million people unable to access their accounts, according to the supplied report. That figure amounts to roughly 60% of Paraguay's adult population, making the disruption unusually broad for a single financial institution. Customers were reportedly unable to use their money even for basic purchases, adding to public anger and the pressure on lawmakers.

The crisis matters because it combines a leadership change with a banking shock and allegations of political influence. The supplied material says investigators are examining whether Pena used his position to favour a bank that expanded rapidly under his government before being suspended over irregularities. The episode has therefore become both a test of Paraguay's political institutions and a challenge to confidence in its financial system.

Pena had tried to resign on Thursday in an apparent effort to retain the special jurisdiction afforded to former presidents, who become senators for life in Paraguay, but lawmakers did not accept the resignation. That left him subject to the ordinary courts and allowed the impeachment process to continue. The former president, who is 47 and an economist, had also been expected to appear before Congress to defend himself, but instead left that task to his lawyers and continued posting on social media.

What remains unclear is how quickly the legal process will move now that the impeachment has been completed and the arrest order has been carried out. It is also not yet clear when affected customers will regain access to their accounts or how the authorities will handle the wider investigation into the bank's suspension. The next developments are likely to focus on the criminal case against Pena, the swearing-in of Alliana, and the response to the banking disruption.

Paraguay has entered a new phase of political turmoil after the Senate voted to remove President Santiago Pena and his vice president, Pedro Alliana, was sworn in as the country's 53rd president. The change in leadership came amid the fallout from the collapse of Ueno Bank, which has triggered a wider banking and governance crisis. Prosecutors said they would seek Pena's arrest after the impeachment vote, while an arrest warrant was also issued for former central bank chief Carlos Carvallo.

The Senate vote was 44-1, with one senator abstaining in the 45-member chamber, according to the supplied report. Pena, who had served since 2023 and belongs to the long-governing Colorado Party, said on social media that he was leaving office with gratitude while acknowledging the anguish of people still waiting for answers. Alliana, 52, took the oath of office on Friday and became the South American country's 53rd president after serving as Pena's vice president.

The immediate trigger for the crisis was the central bank's intervention at Ueno Bank earlier this week, after it said the lender had fallen below legal solvency standards. Regulators seized the bank and transferred its remaining assets to other institutions as a safeguard, but millions of customers lost access to their accounts and pension payments. The bank had about 3 million members, making it one of the country's most widely used financial institutions and a major part of everyday banking for Paraguayan households.

The case matters because it combines a leadership change with questions over financial oversight, public funds and possible conflicts of interest. The supplied report says questions have arisen over whether Ueno Bank was properly regulated and whether Pena had interests linked to the lender. That has turned the collapse into a test of both political accountability and the independence of Paraguay's financial institutions.

Ueno Bank's rapid rise helps explain the scale of the shock. The lender consolidated under the Ueno brand in 2023 and grew to become Paraguay's fifth-largest bank by deposits, with $800m in public money helping fuel that expansion. Its sudden failure has therefore affected not only private customers but also the handling of state-linked funds, increasing pressure on regulators and prosecutors to explain what went wrong.

What remains unclear is how far the criminal cases will go and whether Pena will be formally detained following the prosecutors' announcement. It is also not yet clear how quickly affected customers will regain access to their money or how the bank's remaining assets will be distributed. The next developments are likely to focus on the legal cases against former officials and on whether the new administration can restore confidence in the banking system.

Paraguay's Senate has moved ahead with efforts to remove President Santiago Pena after a rare session on Friday, intensifying a political crisis triggered by the collapse of Ueno Bank. The decision came as lawmakers weighed impeachment charges already filed against the president, despite his request for a 72-hour extension to prepare his defence. Pena said he had been given less than 12 hours to respond to what he described as an accusatory writ and hundreds of pages of attachments.

The case has sharpened scrutiny of Pena's past links to Grupo Vazquez, the parent company of the collapsed lender, which he held until March 2025. Ueno Bank grew rapidly after receiving a full banking licence in 2023, expanding from a long-established but small operation into a major digital bank with more than 70 branches and millions of customers. According to the supplied report, the bank also managed about $800m of public funds, including roughly $380m invested by Paraguay's state pension and health fund.

The central bank placed Ueno Bank into resolution on Monday after finding that its solvency ratio had fallen to less than half the legal requirement. Resolution is the strongest step regulators can take short of liquidation, and it allows authorities to transfer deposits to other institutions before winding up remaining assets. Customer accounts were frozen, leaving depositors, retirees and workers trying to recover savings and unpaid wages.

The collapse has also prompted wider questions about oversight, public fund management and the speed of regulatory intervention. The political fallout is significant because the crisis has been described as Paraguay's deepest in more than a decade. The impeachment effort now sits alongside a banking emergency that has affected confidence in the country's financial system and in the institutions responsible for supervising it.

The situation is especially sensitive because Ueno Bank had become a highly visible brand, sponsoring the national football team and building a large retail presence across the country. Its rapid rise and sudden failure have made the case a test of both governance and financial regulation. The bank's history helps explain the scale of the shock.

Established in 1976, it remained a modest financial operation for decades before its 2023 licence renewal and rebranding accelerated its growth. The supplied report says it reached about 3 million customers, or roughly 60% of Paraguay's adult population, within five years of that expansion. That reach meant the collapse was not limited to a single institution but touched a broad share of households and public-sector funds.

The Senate's decision to continue with removal efforts also reflects the political weight of the allegations. Lawmakers have focused on whether Pena's previous stake in the parent company created a conflict of interest, and whether authorities failed to act on warning signs around the lender's condition. Pena, a former International Monetary Fund economist, has argued that he needs more time to answer the charges properly.

His request for an extension suggests the process may continue to unfold over several days rather than ending with Friday's session. What happens next will depend on how quickly the Senate advances the impeachment process and whether Pena is given additional time to present his defence. It is also unclear how fast affected customers will regain access to their money, or how the bank's assets will be handled under resolution.

The broader legal and regulatory consequences remain open, including any further action over public funds placed in the bank and the oversight failures now under scrutiny.

Paraguay's Senate has resumed impeachment proceedings against President Santiago Pena as the country faces a widening financial and political crisis linked to the collapse of Ueno Bank. Lawmakers met in a rare session on Friday to consider the president's future after charges were formally filed the previous day. The move came despite Pena's resignation, which has not halted the effort to remove him from office.

Pena has asked for a 72-hour extension to prepare his defence before the Senate. The lower house of Congress had already approved impeachment charges in a unanimous 78-0 vote, underscoring the scale of political support for the proceedings. The president, elected in 2023, said in a video address on Thursday that he wanted the return of public funds to be guaranteed and apologised for failing to prevent the crisis.

The impeachment drive is tied to central bank intervention earlier this week at Ueno Bank, one of Paraguay's fastest-growing digital lenders. Regulators said the bank had breached minimum solvency requirements, prompting action that has since drawn scrutiny over oversight failures. According to the supplied report, the collapse of Ueno, which held $850m in public funds, has left more than half of Paraguay's population without access to their accounts.

The case has become a major test of confidence in Paraguay's financial system and in the institutions meant to supervise it. Lawmakers have accused Pena of a conflict of interest because he previously held a stake in Ueno's parent company, Grupo Vazquez, until last year. They have also questioned whether authorities failed to act on warnings about the lender's financial position, raising broader concerns about governance and regulatory independence.

The fallout has already reached the top of the financial system. Paraguay's central bank chief, Carlos Carvallo, has resigned, and arrest warrants were issued for eight Ueno executives, who later turned themselves in. The attorney general has also ordered three criminal investigations into the bank's collapse, including probes into regulatory oversight and the placement of public funds in the institution.

What remains unclear is how quickly the Senate will move after Pena's request for more time, and whether the impeachment effort will proceed to a final vote. It is also not yet clear how fast affected account holders will regain access to their money or how the criminal investigations will develop. For now, the crisis has placed Paraguay's presidency, banking supervision and handling of public funds under intense scrutiny.

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