Ousted Paraguayan President Santiago Peña was placed under house arrest Friday after the Senate removed him from office over the collapse of Ueno Bank. He is accused of breach of trust, influence peddling and using public office for personal gain, allegations he denies.
Peña must remain at one of his homes in Asunción until appearing before prosecutors Saturday morning, according to the Associated Press report. The charges carry penalties of up to 10 years in prison for the most serious offenses. The order placing Peña under house arrest keeps Peña at home until prosecutors hear his case.
Under House Arrest After Senate Removal
All 44 senators present voted to remove Peña for misconduct in office. The decision made him the second Paraguayan president ousted by impeachment since the end of Alfredo Stroessner’s 35-year dictatorship in 1989.
Regulators seized Ueno Bank three days before the Senate vote. The collapse barred nearly half of Paraguay’s 6 million people from accessing savings, according to the report, and intensified the country’s worst political crisis in more than a decade.
Lawmakers accuse Peña of using political influence to direct hundreds of millions of dollars in public funds to Ueno while regulators overlooked risky insider lending. The impeachment charges also cite his stake in the bank’s holding company, which he divested under pressure last year, and his appointment of Carlos Carvallo to lead the central bank in 2023.
Legislators further accuse Peña of allowing the state pension fund to deposit $355 million at Ueno, beyond legal limits. Peña has denied wrongdoing. The allegations remain charges, not findings of guilt. The order placing Peña under house arrest does not determine whether those accusations are true.
Depositors Still Await Access to Savings
The bank’s failure affected customers who could no longer withdraw cash, use cards or reach their savings after the seizure. Ueno had attracted more than 1 million Paraguayans to open their first bank account, according to the company.
Some depositors began recovering money Thursday. The initial group included customers with up to 10 million guaraníes, about $1,500. Deposits are insured up to about $35,000, which the central bank says covers 97% of Ueno’s customers.
The central bank has called the collapse an isolated case and said the broader financial system is safe. The report also described wider effects: a ride-hailing app that relied on Ueno shut down, leaving 3,000 drivers without work, while $21 million in loans earmarked for public works was trapped at the bank.
Protests in Asunción pressed for the return of frozen savings and accountability. Crowds gathered outside Peña’s home Friday night as police surrounded it while he remained under house arrest. Separately, prosecutors ordered the arrest of Carvallo, though it was not clear whether he had been taken into custody.
New President Faces Pressure Over Bank Fallout
Vice President Pedro Alliana was sworn in Friday to serve the remainder of Peña’s term, which ends in August 2028. Alliana is also under investigation in connection with Ueno. He said the country he was receiving had urgent needs, as his government faced pressure to return depositors’ money and punish those responsible.
The case against Ueno executives is separate from the allegations against Peña. Prosecutors have charged 27 people in that case, including the bank’s founder and former chief executive Miguel Vázquez. A judge ordered six former directors held in pretrial detention and two others confined to their homes with electronic monitors.
The collapse has also focused attention on how banks attract public deposits and face oversight. Paraguay’s dispute joins broader coverage of banking rules and supervision, changes in commercial banking, and capital in fintech markets. Those stories concern distinct developments.
Peña’s next stated step is to appear before prosecutors Saturday morning. Depositors are beginning to recover some funds, while authorities continue separate proceedings into the former president and Ueno’s executives.
