Paraguay ousts Peña, then puts him under house arrest

Paraguay's Senate removed President Santiago Peña on November 6, hours before he was placed under house arrest over allegations linked to a bank collapse that froze millions of customers' accounts. ^[5]

The Senate voted 44-0 among those present to remove him for misconduct in office. Prosecutors are pursuing allegations including breach of trust, influence peddling and using public office for personal gain. Peña denies wrongdoing, and the impeachment vote does not establish criminal guilt. ^[1][5]

Vice-President Pedro Alliana was sworn in to serve the rest of the presidential term, which ends in August 2028. He, too, is under investigation in connection with Ueno Bank, according to the Associated Press. The change at the top therefore leaves the government facing questions about the same institution whose collapse forms the backdrop to Peña's removal and the allegations against him. ^[5]

The Daily Inference reported on November 5 that nearly three million customers had lost access to their accounts and that the Senate would consider allegations against the president. The crisis has since moved from a banking intervention to a transfer of presidential power and a criminal investigation reaching the former head of state.

Protesters gathered outside Congress during the vote, demanding their savings back and accountability. A worker at the state electricity company, whose employee pension fund held money at Ueno, called the crisis an "enormous betrayal of trust." ^[5]

The investigation reaches the presidency

Peña was ordered to remain at one of his homes in Asunción until an appearance before prosecutors the following morning. Prosecutor Elena Fiore Franco said he was at home, had voluntarily allowed officers inside and had made himself available for procedural purposes. ^[1][5]

Before the impeachment vote, Peña said he recognised the anguish of customers waiting for answers about their money. He has denied wrongdoing in connection with the bank. ^[1][5]

The scrutiny centres on the relationship between political power, Ueno's owners and the institution responsible for supervising banks. In 2023, Peña appointed Carlos Carvallo to lead Paraguay's central bank. Carvallo had previously headed the finance company that became Ueno. ^[2][5]

Peña also remained a business partner of Grupo Vázquez, Ueno's owner, until March 2025, according to the Associated Press. Ueno said Peña was never a shareholder or investor in the bank itself. Those are different relationships, and the bank's statement addresses the latter. ^[2][5]

The central bank said Ueno had lent to companies linked to its own business group above permitted limits, compromising its solvency, according to ABC Color. Such lending puts a bank's money into businesses connected to its owners, making limits on those exposures a central safeguard. ^[3]

Investigators still have to establish what influence Peña exercised, whether he benefited personally and what role, if any, he played in decisions affecting Ueno. His business ties and appointments provide grounds for scrutiny, not a finding that he committed a crime.

In October, Peña said he did not know about an internal supervisory memorandum concerning Ueno and said it had not been officially sent while its author was in his post. He also said that opening a regulatory proceeding did not mean a bank would close, and warned that political and media disputes could damage investment. ^[4]

A guarantee is not access to cash

The central bank placed Ueno into resolution, the process for dealing with a failing bank, after its solvency ratio fell below half the legal minimum. That measure compares a bank's capital cushion with the risks it carries. The intervention left customers unable to use deposits, savings or card payments. ^[2][5]

Ueno said it had about three million customers, roughly 60% of Paraguay's adult population. For a bank with that reach, losing account access meant an immediate disruption to everyday payments on a national scale. ^[2]

The central bank said deposits were guaranteed up to 228 million guaraníes, about $38,000, and that this protection covered 97% of Ueno's customers. That percentage describes customers covered, not the share of all money in the bank that will be recovered. ^[2][5]

Some depositors began recovering money on November 5, initially those with balances of up to 10 million guaraníes, about $1,500. The central bank said insured amounts must be paid within 15 days, with a possible extension of another 15 days. ^[5]

The regulator described Ueno's problems as isolated and said they did not affect the financial system as a whole. But the consequences extend well beyond individual savings accounts. ^[2]

Ueno managed between $800 million and $850 million in public money, according to the Associated Press. That included about $380 million invested by IPS, the state pension and health fund, according to IPS. The sums place public services and retirement funds alongside households in the queue for answers about recovery. ^[2]

The costs beyond the bank

The state power company said $21 million in loans intended for public works was trapped at Ueno. A ride-hailing app affected by the collapse shut down, leaving 3,000 drivers without work, according to the Associated Press. ^[5]

A separate criminal case has already reached Ueno executives and associates. Prosecutors charged 27 people, and a judge ordered six former directors held in pretrial detention and two others placed under house arrest with electronic monitors. Those measures are not findings of guilt. ^[5]

Alliana now takes over a government whose immediate task includes addressing depositors' demands while the investigation reaches into its own leadership. For customers, the next practical test is the release of insured money under the central bank's 15-day payment requirement, or its permitted extension. ^[2][5]