Paraguay President Impeached And Arrested As Bank Collapse Freezes Millions Of Accounts

The Palacio de los López, the presidential palace in Asunción, Paraguay. (Photo: Wikimedia Commons)

In one of the fastest political falls in South American history, Paraguay's President Santiago Peña was removed from office on Friday, placed under house arrest within hours, and replaced by his own deputy. The trigger was the collapse of a digital bank that froze the savings of nearly half the country, and the crisis is far from over.

A Bank Collapse That Shook A Nation

The crisis began when regulators seized Ueno Bank, one of Paraguay's largest digital lenders, just three days before the impeachment vote. The bank's collapse locked almost three million customers out of their accounts and bank cards, in a country of just over six million people. For days, ordinary Paraguayans could not access their own money, and street protests grew across the capital, Asunción.

Investigators say the bank's troubles were not an accident. Lawmakers accused Peña of using his political influence to steer hundreds of millions of dollars in public funds into Ueno, while regulators looked the other way as the bank took on risky insider loans. The charges also mention diverted pension funds and an alleged institutional cover-up involving the central bank.

From Resignation Offer To Removal In 24 Hours

Peña, 47, offered his resignation on Thursday as the scandal exploded. But the Senate refused to accept it and chose to finish the impeachment process instead. The Chamber of Deputies had already voted 78 to zero to impeach him, and on Friday all 44 senators present voted to remove him from office for poor performance of his duties.

The removal strips Peña of the lifetime Senate seat and parliamentary immunity that former presidents normally enjoy in Paraguay. It also makes him only 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.

House Arrest And Criminal Cases

Within an hour of the Senate vote, prosecutors ordered Peña to be held under house arrest at one of his homes in Asunción. He faces a criminal investigation on suspicion of breach of trust, influence peddling and misuse of public funds, and he has been ordered to appear before the prosecutor's economic crimes unit on Saturday morning. The most serious charges carry up to ten years in prison.

Paraguay's Attorney General has opened three criminal cases against Peña and other former officials linked to the bank crisis, and prosecutors say more charges are still being decided.

A New President With Questions Of His Own

Vice President Pedro Alliana, 52, was sworn in as Paraguay's new president on Friday, just as his predecessor was being placed under house arrest. Alliana, who served as vice president since Peña took office in 2023, will serve out the remainder of the term, which runs until August 2028.

Alliana himself is also under investigation in connection with the Ueno collapse, and millions of depositors are demanding their money back. His first test will be returning people's savings and holding those responsible to account, while proving that his own hands are clean.

The fall of a president in a single day is a reminder of how quickly trust can collapse when a financial crisis meets political power. Paraguay now waits to see whether its institutions can deliver justice, and whether nearly three million people will ever get their savings back.

Do you think Paraguay's new president can restore trust and return people's savings, or is the damage already too deep? Share your view in the comments.