Paraguay ousts Peña over bank collapse; VP Alliana sworn in

Asunción — Paraguay's Senate removed President Santiago Peña from office on Friday over the collapse of Ueno Bank, and hours later prosecutors ordered him placed under house arrest on alleged economic crimes. Vice President Pedro Alliana was sworn in before Congress that night and will serve out the term until August 15, 2028.

The vote was 44 of 45 senators, including the ruling Colorado Party's own bloc, after a trial lasting some ten hours, MercoPress reported. Senate President Basilio Núñez declared Peña “guilty of poor performance in his duties”, according to The Japan Times. Thousands of savers gathered outside Congress celebrated the decision.

The trigger was Tuesday's central bank takeover of Ueno Bank over insolvency and irregular loans to companies owned by its owners. The freeze locked the deposits of nearly three million customers — about 60% of the adult population — plus hundreds of millions of dollars in public and pension funds. The Guardian reported that many could not pay for basics such as bread and water, and that protests spread across the country, some involving clashes with police.

The conflict of interest at the heart of the crisis is stark. Central Bank president Carlos Carvallo had been Ueno's chief executive before Peña appointed him, and Peña himself was a shareholder in the bank's holding company until April 2025. Prosecutors are investigating the ousted president for alleged breach of trust, influence peddling and self-serving administration; the arrest order also covers Carvallo. Peña denies any wrongdoing.

Peña had tendered his resignation on Thursday, writing that he wanted to “avoid further harm to the country and help restore calm to Paraguay”. Congress never considered it, and the impeachment cost him the lifetime Senate seat and immunity he would otherwise have gained. His lawyers argued they lacked time to prepare a defence; the Senate rejected a 72-hour extension.

Alliana, 52, a former Colorado Party president who had distanced himself from Peña on the eve of the bank takeover, is expected to reshuffle the government and the Central Bank. The opposition accepted the succession with reservations: senator Rafael Filizzola called Alliana “complicit” in what happened but said his side accepted it “to ensure institutional continuity”.

The new president's first test is the frozen money: how and when 2.9 million account holders regain access will decide whether the streets calm down. The next marker is Peña's transfer to the Specialised Unit for Economic Crimes and Anti-Corruption, which prosecutors say he awaits at home. Read our earlier coverage of the impeachment over the Ueno Bank collapse.