Paraguay's Senate has voted to remove President Santiago Peña from office over the collapse of Ueno Bank, a crisis that locked nearly half the country's population out of their savings and plunged the South American nation into its worst political upheaval in more than a decade.
All 44 senators present voted on Friday to remove Peña for misconduct in office, with one senator in the 45-member chamber abstaining. Within hours, prosecutors ordered the 47-year-old former president placed under house arrest on suspicion of breach of trust and other crimes, and he is due to appear before the attorney general's economic crimes unit on Saturday.
Vice President Pedro Alliana, 52, was sworn in later on Friday as Paraguay's 53rd president. He will serve out the remainder of Peña's term, which runs until August 2028. Alliana had served as vice president since the start of Peña's term in 2023, and before that spent nearly a decade in the Chamber of Deputies, including three years as its president, after beginning his political career as governor of his home department of Ñeembucú in the south of the country.
The impeachment followed the sudden collapse of Ueno Bank, one of Paraguay's largest lenders. The central bank seized the bank on Tuesday after finding that its solvency ratio had fallen below the legal minimum, meaning it did not have enough collateral to cover its loans and other ventures. Its remaining assets were transferred to other banking institutions as a safeguard, but roughly three million customers — nearly two-thirds of Paraguay's adults in a country of about 6.1 million people — abruptly lost access to their accounts, bank cards and pension payments.
Ueno had grown at remarkable speed. Consolidated under the Ueno brand in 2023, it became Paraguay's fifth-largest bank by deposits, and the company claimed that more than a million Paraguayans had opened their first bank account with it. Al Jazeera reported that some $800 million in public money had fuelled its growth, including $355 million in state pension funds invested in the bank.
Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public funds into Ueno while regulators overlooked risky lending to companies linked to the lender's owners. Peña was identified in 2023 as a shareholder in Ueno's parent company, though he has said he sold his shares in early 2025. He has denied wrongdoing and has signalled that he plans to cooperate with the investigation.
The fall from power was unusually swift. After the bank was seized, Peña offered to step down, saying he wanted to preserve the country's democratic institutions. But on Thursday, Congress rejected his resignation and instead pressed ahead with impeachment. Had he been allowed to resign, he would have kept the right of former presidents to become a lifetime senator, with legal protections from prosecution. Impeachment stripped him of both the seat and the immunity.
In Thursday's hearing, the Chamber of Deputies voted 78 to zero to impeach Peña, clearing the way for the Senate to remove him the following day. The chamber declined, however, to open impeachment hearings against Alliana. Peña did not appear at the impeachment hearings in person on Friday, sending his lawyers instead, and earlier in the day he had asked for more time to exercise what he called his constitutional right to a defence, saying the time allotted was clearly insufficient.
His own party turned against him. Peña is a member of the long-governing Colorado Party, which has largely dominated Paraguayan politics since 1948, and the party was among the groups backing his removal. “We support the impeachment of the president of the republic, Santiago Pena, in order to restore the republic's institutions,” former president and party leader Horacio Cartes wrote in a statement.
Prosecutors have opened criminal cases against Peña and other former officials. He faces charges including breach of trust, influence peddling and using public office for personal gain, the most serious of which carry prison terms of up to 10 years. At least 27 people are facing criminal charges in relation to the scandal, including lead shareholder Miguel Vazquez, with investigators examining attempted fraud, breach of trust, misappropriation of funds and influence peddling. An arrest warrant was also issued for Carlos Carvallo, who ran the finance company that became Ueno until Peña appointed him head of the central bank in 2023; Carvallo resigned earlier this week.
“I take my leave with gratitude, while fully acknowledging the anguish of those who are currently awaiting answers,” Peña wrote on social media on Friday afternoon. In an earlier statement he said: “I do not wish for my presence to be a source of greater division or instability. It is my responsibility to place the country above my own personal fate.” He is the second Paraguayan president to be removed through impeachment since the country returned to democracy in 1989, after the end of General Alfredo Stroessner's 35-year dictatorship.
What happens next will turn on two fronts. In the courts, Peña's appearance before prosecutors on Saturday opens a criminal process that could last months, with investigators examining whether the bank was shielded from accountability because of its government connections. In government, Alliana takes charge of a country facing one of its most severe political and economic scandals in recent history, with millions of savers waiting to learn when — and how much of — their money they will get back, and with the banking system itself now under intense scrutiny.
