Paraguay’s Peña Removed as Ueno Bank Crisis Hits Millions of Depositors

Paraguay’s banking crisis has forced a change at the top of government, but the immediate test for new President Pedro Alliana is whether millions of customers can recover their money. Nearly three million depositors were affected after Ueno Bank was taken over amid insolvency concerns, and the turmoil has also spread to the country’s political and business sectors.

A rapid transfer of power

On Friday, the Senate voted to impeach Santiago Peña, with 44 of 45 senators supporting his removal and one absent. Senate President Basilio Núñez said Peña was “guilty of poor performance in his duties.” Senators then appointed Vice-President Alliana as president, a role he is due to hold until 2028.

Hundreds of people gathered outside Congress celebrated the vote. “Justice has been done. Now we want him to give us back our money and go to jail,” protester Jessica Aquino, 32, told AFP.

Authorities placed Peña under house arrest minutes after the impeachment, prosecutor Silvia Margarita González Vester said. He had offered to resign, but lawmakers continued the proceedings, stripping him of political immunity. Peña urged national reconciliation in a post on X shortly before his removal: “Today, we must come together as Paraguayans to rebuild our institutions and restore trust.”

The opposition accused Peña of a conflict of interest because he held a stake in Grupo Vázquez, the company that controlled Ueno, until last year. Peña denied the accusation. The Attorney General’s Office said it was investigating his actions related to Ueno’s supervision and resolution, as well as the placement of public funds at the bank. González Vester said Peña would be questioned Saturday over alleged breach of trust, influence-peddling and misappropriation of funds.

Repayments begin as scrutiny widens

Alliana has promised that affected customers, including pensioners, will be compensated. “Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated,” he said. Opposition lawmakers also sought to impeach Alliana over the crisis, but their motion failed to win congressional approval.

The Central Bank began advance payments to some affected depositors on Thursday afternoon, according to an official who spoke to AFP. The initial payments, of up to about US$1,600, are for customers who have no loans and hold an account at another bank or institution in Paraguay. José Maciel of the Central Bank’s Deposit Guarantee Fund said later groups of beneficiaries would be announced as payments proceed.

Public anger had been building for days. Thousands demonstrated for a third consecutive night on Thursday in Asunción and other cities, demanding the return of their money. Police dispersed a protest in the capital with tear gas and water cannons. “Santiago Peña has hurt so many Paraguayans, so many families, business owners and small business people, including my own son, who had savings in Ueno Bank,” protester Cynthia Farina told AFP.

Fallout reaches beyond customers

Ueno grew from a small, digital-first fintech into a major bank serving low-income customers. It also handled state pensions and accounts for several government entities, giving the bank’s collapse a reach well beyond its depositors.

The fallout has already cost Central Bank President Carlos Carvallo and Interior Minister Enrique Riera their jobs. Eight Ueno executives have been arrested, and police raided locations connected to Grupo Vázquez on Wednesday and Thursday.

In Argentina, about 1,000 employees of ITTI, a technology company within Grupo Vázquez, were suspended without pay for 30 days. Paraguayan football organizations have also been affected: Ueno sponsors several first-division clubs and the national team, whose members said in a statement on X, “We were also victims of this situation.”

The US Embassy in Paraguay expressed solidarity with the country’s people on Friday but did not comment on Peña’s removal. For Alliana, the political transition now runs alongside a concrete financial task: restoring access to funds and rebuilding confidence in a bank that served households, public institutions and national sports.