Paraguay Bank Collapse Triggers President’s Impeachment and Arrest

Paraguay woke up to a new leader after a political earthquake in Congress: Pedro Alliana has assumed the presidency following the impeachment of Santiago Peña, ousted amid a banking crisis that has left nearly half the country unable to access their accounts.

Senators moved swiftly to elevate Mr Alliana, previously the vice president, soon after voting yesterday to remove Mr Peña in connection with the collapse of Uneo Bank, a lender with which he had links.

Senate President Basilio Núñez said Mr Pena was found “guilty of poor performance in his duties” after 44 of 45 senators backed impeachment, with with one voter absent.

Outside Congress, hundreds gathered and cheered the decision as word of the vote spread through the crowd.

“Justice has been done. Now we want him to give us back our money and go to jail,” Jessica Aquino, 32, told reporters.

Pedro Alliana will serve as president until 2028

Minutes after the vote, authorities placed the former president under house arrest, prosecutor Silvia Margarita Gonzalez Vester said.

In his first statements as head of state, Mr Alliana pledged not to leave behind the almost three million depositors — including pensioners — affected by Ueno Bank’s takeover as insolvency fears mounted.

“Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated,” said Mr Alliana, who will serve as president until 2028.

Opposition lawmakers had also sought to impeach Mr Alliana over the same crisis, but their effort failed to win approval in Congress.

The bank’s failure has fuelled days of anger in the streets, drawing thousands of demonstrators demanding consequences for the US-backed president, who until last year held a stake in Grupo Vazquez, the company that controlled Ueno Bank.

Advance payments to an unspecified number of affected depositors began on Thursday afternoon, according to a Central Bank official.

Demonstrators burn a flag depicting the impeached Paraguayan President Santiago Peña during a protest

Jose Maciel of the Central Bank’s Deposit Guarantee Fund said the first stage of compensation — up to about $1,600 (€1,435) — will be directed to customers who do not have loans and who maintain an account at another Paraguayan bank or institution to receive the money.

Additional recipients “will be announced progressively over the course of the payment process”, he added.

Opposition leaders have argued Mr Pena faced a conflict of interest, an allegation he denied.

Although Mr Pena had offered to resign amid the fallout, government officials proceeded with impeachment, a step that also removed his political immunity.

The Attorney General said an investigation is under way into him for “acts related to the supervision and resolution of Ueno Bank SA and the placement of public funds in said entity”.

He will be questioned over alleged crimes of breach of trust, influence peddling and misappropriation of funds, Ms Vester said.

Shortly before senators voted him out, Mr Pena called for unity in a post on X.

“Today, we must come together as Paraguayans to rebuild our institutions and restore trust,” he said.

Ueno Bank sponsors several first division teams as well as the national team.

“We were also victims of this situation,” members of the national team said in a statement on X.