In Asunción, a former president who once stood at the center of Paraguay's economic promise now waits under guard, as the Senate's vote has turned a bank's collapse into a reckoning with power itself. Ueno Bank, which grew within a few years from an obscure lender into one of the country's largest, left more than three million people unable to reach their savings, and the sense of betrayal runs deeper than the balance sheets. Across the nation, a familiar question returns to the public square: how much trust can be placed in those who hold authority over other people's money, and who answers w
Paraguay's Senate Ousts President Peña Over Ueno Bank Collapse; He Is Placed Under House Arrest
Over three million Ueno customers, including pensioners and state employees, lost access to their savings and cards, and about 3,000 ride-hailing drivers lost work.
In Asunción, a former president who once stood at the center of Paraguay's economic promise now waits under guard, as the Senate's vote has turned a bank's collapse into a reckoning with power itself. Ueno Bank, which grew within a few years from an obscure lender into one of the country's largest, left more than three million people unable to reach their savings, and the sense of betrayal runs deeper than the balance sheets. Across the nation, a familiar question returns to the public square: how much trust can be placed in those who hold authority over other people's money, and who answers when that trust breaks. The answers are still being written, in courtrooms, in the rebuilt accounts of ordinary families, and in the uneasy calm of a country that has seen this kind of ending before.
On Friday night, police surrounded a home in Asunción where Santiago Peña had been ordered to stay. Outside, protesters waved Paraguayan flags and promised to keep vigil until morning. Hours earlier, the Senate had voted 44 to 0 to remove him from the presidency, the second Paraguayan leader ousted by impeachment since the Stroessner dictatorship ended in 1989. He denies wrongdoing and faces charges including breach of trust and influence peddling.
The crisis began with the collapse of Ueno Bank, a digital lender that had grown to more than three million customers, many of them opening their first account there. When regulators seized it, savers lost access to cash and cards. The damage spread quickly: a ride-hailing app shut down, leaving about 3,000 drivers without work, and public works loans sat trapped inside the bank.
Lawmakers say Ueno's rapid rise was fueled by more than $800 million in public money, and they point to Peña's past stake in the holding company and his appointment of Carlos Carvallo, Ueno's former head, as central bank chief. Central bank findings described loans to companies tied to the controlling family that exceeded legal limits and lacked collateral. Peña's own political base crumbled after Horacio Cartes, his longtime patron, turned against him.
Peña resigned Thursday, but the Senate pressed on. Now comes Saturday's appearance before prosecutors, the hunt for Carvallo, and the question that matters most to ordinary Paraguayans: whether Vice President Alliana can get their savings back.
On Friday night, November 6, police ringed a home in Asunción where Santiago Peña had been ordered to stay. Outside, protesters waved Paraguayan flags and said they would keep watch until morning. Only hours earlier, the Senate had voted to remove him from the presidency. He faces charges that include breach of trust and influence peddling, and he is due before prosecutors on Saturday.
All 44 senators present voted to remove Peña for misconduct. He is the second Paraguayan president ousted through impeachment since Alfredo Stroessner's 35-year dictatorship ended in 1989. Some of the charges, which include using public office for personal gain, carry prison terms of up to 10 years. Peña denies wrongdoing. Vice President Pedro Alliana was sworn in the same day to finish the term, which runs until August 2028. Alliana is himself under investigation in connection with the bank. After taking office he said the country he receives has urgent needs.
The cause is the collapse of Ueno Bank, one of Paraguay's largest lenders, which regulators seized earlier this week after finding serious financial irregularities. By the company's own figures, the digital bank had more than three million customers, and over a million Paraguayans had opened their first account there. Its clients included pensioners, state employees and members of the national football team, which it sponsored. After the intervention, customers could not withdraw cash, reach their savings or use their cards.
The damage spread. A ride-hailing app that relied on Ueno shut down, leaving about 3,000 drivers without work. The state electricity company said $21 million in loans from the Inter-American Development Bank and Taiwan, meant for public works, was stuck at the bank. Paraguayan bonds suffered some of the steepest losses in emerging markets this week, and the guaraní weakened against the dollar. Some depositors began getting money back on Thursday, starting with accounts up to 10 million guaraníes, about $1,500. Deposits are insured up to roughly $35,000, which the central bank says covers 97% of customers. It calls the collapse an isolated case and says the wider financial system is safe.
Lawmakers say Ueno grew from an obscure finance company into one of the country's largest banks by deposits within a few years, helped by more than $800 million in public money. The accusations focus on Peña's earlier stake in Ueno's holding company, which he sold in March 2025, and on his 2023 appointment of Carlos Carvallo as central bank chief. Carvallo had headed the finance company that became Ueno. Lawmakers also accuse Peña of letting the state pension fund deposit $355 million with the bank, beyond legal limits. Peña is accused of steering public funds to Ueno while regulators ignored risky lending to companies tied to its owners. Prosecutors have ordered Carvallo's arrest; it was not immediately clear whether he had been detained.
The central bank reportedly found that some loans to companies linked to controlling shareholder Grupo Vázquez exceeded legal limits and lacked adequate collateral. It also found poorly documented loans and expenses wrongly counted as assets. José Tomás Sánchez, a political theory professor at the National University of Asunción, said the central bank under Peña lost credibility and neutrality and relaxed its controls to favor the business group. Weeks earlier, Peña had told reporters a regulatory inquiry did not mean Ueno would close, and accused the media of creating panic.
Prosecutors have charged 27 people linked to the bank with offenses including breach of trust and attempted fraud. A judge ordered six former directors, including founder Miguel Vázquez, held in pre-trial detention, and placed two others under house arrest with electronic monitoring. Authorities seized luxury cars, a yacht and two small planes linked to Vázquez.
Peña's support collapsed inside the ruling Colorado Party once former president and party leader Horacio Cartes turned on him. Cartes, a tobacco magnate, had made Peña, a former IMF economist, his finance minister and backed his presidential bids. Peña later tried to build his own base, and analysts say Ueno's growth fed that effort. In September, senators loyal to Cartes began questioning the central bank over related-party lending. After Ueno was seized on Tuesday, Cartes publicly backed removal. Andrew Nickson of the University of Birmingham said Cartes put the nail in the coffin and left Peña with no political base.
Peña resigned on Thursday, but lawmakers pressed on. The lower house voted 78-0 to approve the charges. Impeachment cost him the immunity he would have kept as a senator for life had his resignation been accepted. In a farewell message he said he did not want his presence to cause greater division, and acknowledged the anguish of those awaiting answers. What follows is Saturday's appearance before prosecutors, the search for Carvallo, and whether Alliana can get depositors their money back.
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Politics & Governance