Paraguay impeaches President Peña over Ueno Bank collapse

Paraguay's Senate has removed President Santiago Peña from office over the collapse of Ueno Bank, a lender tied to his government whose failure locked around three million people out of their accounts and brought thousands onto the streets. Hours after the vote on Friday, Peña was placed under house arrest on suspicion of breach of trust, the South China Morning Post reported.

Senators voted 44 in favour of impeachment, with one absence among the 45 members, declaring Peña "guilty of poor performance in his duties", according to The Hindu. He had offered to resign over the disaster and had previously announced he would step down, but lawmakers — including members of his own party — pressed ahead. Impeachment, rather than resignation, strips him of the immunity granted to former presidents and bars him from becoming a senator for life, constitutional experts told AFP.

The mechanism of the crisis is painfully direct. The Central Bank seized Ueno on Tuesday over solvency concerns and froze its accounts. The bank, which began as a digital-first fintech serving low-income customers, had grown to handle state pensions and the accounts of several state entities — roughly one in three Paraguayans held deposits there, the Japan Times reported. When the doors shut, wages, pensions and savings stopped moving.

Relief has begun, but slowly. Advance payments of up to around $1,600 started on Thursday for depositors without loans who hold an account at another institution, José Maciel of the Central Bank's Deposit Guarantee Fund told AFP, with further beneficiaries to be announced "progressively". Protests continued for a third consecutive night on Thursday; police dispersed one crowd in the capital with tear gas and water cannon.

Peña, 47, who held a stake in Grupo Vázquez — Ueno's controlling group — until last year, denies the opposition's accusation of a conflict of interest. "It was never my intention to betray the trust you placed in me," he said in a televised apology on Thursday. The Attorney General's office is investigating "acts related to the supervision and resolution of Ueno Bank S.A. and the placement of public funds in said entity." The US Embassy expressed "its solidarity with the Paraguayan people" without naming the president, a notable silence given Washington's past backing.

The downfall is extraordinary for a country long regarded as one of South America's most stable economies. The next tests come fast: the pace of the Deposit Guarantee Fund's phased repayments, and the Attorney General's decision on whether the breach-of-trust case against Peña proceeds to formal charges.