President Santiago Pena placed under house arrest after Senate impeachment

Paraguay's Senate voted on Friday to impeach President Santiago Pena following a banking crisis that left millions of citizens unable to access their deposits. The impeachment cleared the way for Vice President Pedro Alliana to assume the presidency for the remainder of the term, which ends in August 2028.

Although Pena had resigned the previous day, senators chose to convict him, stripping him of the lifetime Senate seat and immunity granted to former presidents, and making him subject to prosecution. Prosecutors subsequently ordered his arrest along with former central bank chief Carlos Carvallo, and Pena was placed under house arrest pending a decision on the final charges.

The crisis centered on Ueno, a digital lender that accounted for about 60% of Paraguay's adult population and held roughly $800 million in public-sector deposits, including pension and health-care funds. The bank's solvency fell below regulatory requirements, prompting the central bank to order a resolution process.

Lawmakers accused Pena of conflicts of interest, misuse of pension funds and interference with the Social Security Institute, citing his sale of shares in Ueno Holding and two loans he received from the institution. They also highlighted his 2023 appointment of central bank chief Carlos Carvallo, who had previously chaired Financiera Ueno, shortly before the bank’s conversion was approved.

Authorities have detained eight senior Ueno executives and charged 27 bank officials and associates with offenses such as breach of trust and attempted fraud.

"We will return to every saver what they are entitled to as quickly as possible," Pena said in a video message to reassure customers.

Protesters gathered outside Pena's residence in Asunción, while police maintained a security cordon. The incident also led to the cancellation of Pena's planned attendance at the Ibero-American summit in Madrid.