Paraguay removes Peña as Ueno collapse triggers criminal case

Paraguay’s political and financial crisis escalated sharply on Friday when lawmakers impeached President Santiago Peña over his alleged role in the collapse of Ueno Bank. Pedro Alliana, Peña’s deputy, was sworn in as interim president after the Senate voted 44-0 to remove him, with one senator absent. Peña had announced his resignation the previous day, saying he wanted to protect the country’s stability and democratic institutions.

Lawmakers rejected that route and proceeded with impeachment, stripping him of the protections normally available to former presidents. The Guardian reported that he was subsequently placed under house arrest, while the BBC said he was arrested shortly after the vote. Prosecutors have now charged Peña with breach of trust and administration for personal gain.

Prosecutor Nancy Salomon said the case concerned his alleged role in the banking crisis, and prosecutors requested that he be held in preventive custody, according to The Guardian. Peña has denied wrongdoing. His lawyer, Ricardo Preda, called the accusations reckless, irresponsible and opportunistic.

The immediate trigger for the crisis was the central bank’s decision to place Ueno Bank into resolution on 3 November after its financial position deteriorated. The reports say the lender had around three million customers, leaving people unable to access savings, receive payments or make transactions. The affected customers represented about 60% of Paraguay’s adult population, according to The Guardian, while India Today described the disruption as leaving nearly half of the country without access to funds.

The central bank reportedly found poorly documented transactions, weak assets and loans to companies linked to Ueno’s controlling Grupo Vazquez conglomerate. India Today, citing the Associated Press, said risky insider lending had been identified as early as June and that corrected accounts showed the bank’s capital had fallen below half the legally required minimum. The consequences extended beyond individual depositors.

About 32,000 pensioners were left without payments, and reports put state and pension-related funds held by Ueno at between $800m and $860m. India Today said a state pension and healthcare fund had about $380m deposited or invested with the bank. The government approved a guarantee mechanism intended to repay stranded depositors within five business days, with initial payments to smaller-account holders reportedly beginning on 5 November.

Peña’s political connection to Ueno is central to the investigation. He previously held about $1m in shares in a company that became Ueno Holding, and the reports differ on when he sold them: The Guardian says April 2025, while India Today cites March 2025. Peña has said he was only an investor and denies having directly invested in the bank.

Questions have also been raised over Carlos Carvallo Spalding, formerly Ueno’s chief executive, whom Peña appointed to head the central bank. Spalding later authorised Ueno’s predecessor to become a digital bank and resigned on 3 November at Peña’s request, according to India Today. The bank’s failure prompted protests, including demonstrations in Asunción where long queues formed outside branches.

The Guardian reported that businesses saw sales fall by as much as 80%, while media outlets in the same financial group were suspended and about 300 workers had their salaries halted. Alliana has promised that people affected by the collapse will be fully compensated.