44 Members Vote to Remove Paraguay’s President After Ueno Bank Crisis
Key Facts
Paraguay’s Senate removed President Santiago Peña on November 6, after all 44 members present voted to convict and remove him for poor performance of his duties, according to the Senate and The Associated Press. The impeachment proceedings began the previous day, amid the fallout from the collapse of Ueno Bank. Vice President Pedro Alliana was sworn in as president to complete the term ending in August 2028. Alliana said the country he was taking over faced urgent needs. The swift transfer of power puts the banking crisis and related investigations at the top of the new administration’s agenda.
The removal came three days after regulators seized Ueno Bank, in a development The Associated Press said triggered the country’s worst political crisis in more than a decade. The central bank board voted unanimously to place the bank into resolution after its solvency ratio fell to less than half the legal minimum. The decision allowed deposits to be transferred to other institutions before the remaining assets were liquidated. The bank’s collapse is a major shock given its customer base and the amount of public money it managed. More than a million Paraguayans opened their first bank account at Ueno, according to the bank, The Associated Press reported.
Some depositors began recovering their money on Thursday, with the first round covering those with deposits of up to 10 million guaraníes, according to The Associated Press. The deposit guarantee cap is about $35,000, and the central bank said this level covers 97% of Ueno depositors. The agency reported that the central bank fund guarantees up to 228.3 million guaraníes per person, enough to cover the same share according to preliminary estimates. The law requires the funds to be paid within 15 days of the bank’s seizure, with the deadline eligible for a one-time extension. Congress unanimously passed a law on November 4 to return funds to Ueno depositors.
The bank’s significance extends beyond individual accounts: it had about 3 million customers and managed between $800 million and $850 million in public funds, according to The Associated Press. Those funds include about $380 million invested by the state pension and health fund. The number of customers is equivalent to about 60% of the country’s adult population, according to data the agency cited from the bank. This scale raises the stakes for completing deposit transfers and compensation payments within legal deadlines. The crisis also directly involves public institution funds, alongside individual savings.
Alongside the compensation process, prosecutors ordered three criminal investigations into the Ueno crisis, according to The Associated Press, citing the prosecutor’s office. The investigations cover the authorities’ oversight of the bank, their handling of its collapse and the deposit of public funds there. Authorities ordered Peña to remain at his home in Asunción until he appears before prosecutors on Saturday morning, over allegations including breach of trust, abuse of influence and using his office for personal gain. Peña denied wrongdoing. Prosecutors also ordered the arrest of Carlos Carvalho, who ran the financial company that became Ueno until Peña appointed him central bank president in 2023; it was not immediately clear whether he had been detained.
The fallout from the crisis was visible in markets, with Paraguay’s bonds recording some of the biggest losses in emerging markets during the week, while the guaraní fell against the dollar, according to The Associated Press. S&P Global Ratings said the events could weaken investor confidence in the short term, but it expects growth to remain resilient. The agency added that, based on the information available, it does not expect the developments to become broad-based credit weaknesses in the banking sector. Its assessment came as investigations continued and the process of returning money to depositors moved forward. Monitoring the financial system’s stability is therefore unfolding alongside the transfer of power and decisions on accountability for the crisis.