44 Members Impeach Paraguay’s President After Banco Ueno Collapse; Vice President Takes Office
Key Facts
Paraguay’s Senate impeached President Santiago Peña on November 6, after members present voted unanimously to convict him of poor performance of his duties, according to the Senate. The Associated Press said 44 members took part in the vote and all voted for his removal. The decision followed the collapse of Banco Ueno, which triggered a financial and political crisis in the country. Vice President Pedro Alliana was sworn in as president to complete the presidential term running from 2023 to 2028, according to the Senate. Power thus passed quickly to Alliana as the crisis’s fallout moved onto political, judicial and banking tracks.
The impeachment trial began on November 5, and Peña requested 72 hours to present his defense, but the Senate rejected the request, according to the Senate’s account. After his removal, authorities ordered him placed under house arrest at one of his homes in Asunción until he appeared before prosecutors on Saturday morning. Investigators suspect breach of trust, influence peddling and use of office for personal gain, according to the Associated Press. Lawmakers accused the president of using his influence to direct public funds to Ueno, while regulators, they alleged, turned a blind eye to high-risk insider lending. Peña denies wrongdoing and said the bank’s problems are a regulatory matter, according to Reuters.
Ueno had about 3 million customers and managed between $800 million and $850 million in public funds, the Associated Press said. This included about $380 million invested by the state pension and health fund, according to the bank. Customers were unable to access their accounts after authorities intervened, the agency said. The central bank began a bank resolution process after the bank’s capital adequacy ratio fell below 50% of the required minimum, following adjustments to its financial data during a restructuring process. The amount of public funds deposited at the bank places the interests of government institutions and individual depositors at the center of the crisis.
Prosecutors said Peña used his office to influence decisions by government agencies and state-owned institutions, with the aim of keeping large amounts of public funds deposited at Ueno despite his financial ties to the lender, according to Reuters. Peña was a shareholder in Ueno’s holding company until March 2025, the agency said, but he denied wrongdoing. Prosecutors sought to freeze the former president’s assets and have him jailed while the investigation continues, according to the Associated Press. Prosecutors said he could face a sentence of up to 20 years if convicted of the two crimes. The allegations remain under investigation, while Peña denies any wrongdoing.
The crisis also affected markets: Paraguayan bonds posted some of the biggest losses in emerging markets during the crisis week, and the guaraní weakened against the dollar, according to the Associated Press. The agency did not report the size of the decline or bond losses in the available information. To address customers’ inability to access their funds, the law provides for deposit insurance to be paid within 15 days of the regulatory takeover of a bank, with the deadline extendable once, the agency said. Payments were due to begin at up to 10 million guaraní per depositor. Alliana pledged to take immediate steps to compensate affected depositors, prioritizing lower-income groups, according to the Senate.
By Saturday, November 7, the government deposit insurance fund had paid the equivalent of $160 million to about 1.2 million depositors, according to a Reuters report citing the central bank. The figure indicates that compensation payments had begun after authorities intervened, while the legal payment deadline remains tied to the date of the bank’s regulatory takeover. Politically, Alliana became responsible for completing the presidential term through 2028, according to the Senate. Peña was due to appear before prosecutors on Saturday morning, as prosecutors sought to freeze his assets and have him jailed while the investigation continues. The Senate did not provide further details in its swearing-in statement about the schedule for implementing depositor compensation.
Paraguay’s central bank describes Ueno’s collapse as an isolated case and says the broader financial system is sound, according to the Associated Press. The message comes as the bank resolution process begins and payments from the deposit insurance fund are made, while investigations into the management of public funds and the former president’s financial ties continue. Peña’s impeachment makes him the second Paraguayan president to be impeached since the end of Alfredo Stroessner’s dictatorship in 1989, the Associated Press said. The case combines political accountability that ended in a change of president with a banking crisis that affected the deposits of millions of customers. Compensation and criminal investigations remain the main next steps covered by the sources.