Paraguay’s Senate voted to remove President Santiago Peña on Friday, placing him under house arrest as the Ueno Bank crisis deepened.
The chamber cast its ballots with near-unanimous support for removal. Forty-four out of 45 senators voted in favour of impeachment, while one lawmaker was absent from the session.
Pedro Alliana, the former vice president, assumed the presidency on Friday. He will serve in the role until 2028.
Justice has been done. Now we want him to give us back our money and go to jail.
Peña must stay at one of his Asunción residences until he appears before prosecutors on Saturday morning. He’s accused of betraying trust, improperly influencing others and exploiting his office for personal benefit, with the most serious offences punishable by up to 10 years in prison.
Before dawn on Tuesday, regulators seized Ueno Bank, shaking the financial system and setting off the most severe political turmoil the country has faced in over a decade. Customers couldn’t access cash, check their savings or pay with their cards.
Almost three million clients could no longer use their accounts, cards or mobile application. The bank’s collapse left nearly half the country’s population unable to access its financial resources.
Lawmakers accused Peña of using his sway to direct hundreds of millions of dollars in public funds to Ueno, alleging that regulators failed to act on risky insider lending during this period.
The impeachment charge points to Peña’s ownership interest in Ueno’s holding company, which he sold under pressure last year. It also cites his choice of Carlos Carvallo to lead the central bank, which regulated the lender.
Today, we must come together as Paraguayans to rebuild our institutions and restore trust.
Peña denied any wrongdoing. He’d proposed stepping down in response to the disaster, but lawmakers continued the proceedings and removed his political immunity.
Alliana promised not to abandon the almost three million depositors affected by the takeover. This group includes pensioners who relied on the bank for their income.
Compatriots who are now going through a difficult time as a result of the financial collapse will be fully compensated.
More than two-thirds of the country’s adults became customers of the digital lender, whose branding appeared at the national soccer stadium and on street vendors’ bank cards. In only a few years, Ueno grew from an obscure lender into one of Paraguay’s biggest banks by deposits, fuelled by more than $800 million in public money.
Ueno sought out poor and unbanked customers with generous supermarket rebates. The bank said more than 1 million Paraguayans had opened their first bank account with the institution.
The economic ripple effects spread quickly. A ride-hailing service dependent on Ueno closed, and 3,000 drivers lost their jobs. Paraguay’s bonds suffered among the steepest declines in emerging markets this week, while the guaraní weakened against the dollar.
Central Bank President Carlos Carvallo and Interior Minister Enrique Riera have left their posts amid the scandal, prosecutors said. Eight Ueno executives have been arrested.
In a separate case involving the bank’s leadership, prosecutors brought charges against 27 people, including Ueno founder and former CEO Miguel Vázquez, accused of violating trust and trying to commit fraud. A judge directed that six former directors, including Vázquez, be kept in pretrial detention.
Authorities have taken luxury cars, a yacht and two small planes connected to Vázquez. Prosecutors also directed that Carlos Carvallo be arrested, but it wasn’t immediately clear whether he had been taken into custody.
The central bank calls the collapse an isolated case. It insists the broader financial system remains safe despite the turmoil.
Deposit Guarantee Mechanics
Sources give different figures for the deposit insurance limit. One report puts the insured amount at about $35,000, a sum the central bank says would cover 97% of Ueno’s customers. Another source gives the guarantee as up to 228.3 million guaraníes, or about US$38,200 per person.
| Group | Limit (Guaraníes) | Limit (USD approx) | Eligibility |
|---|---|---|---|
| First phase | Up to 10 million | About US$1,670 | No loans; account at another bank |
| Second phase | Up to 121.76 million | About US$20,400 | Announced progressively |
| Full guarantee | 228.3 million | About US$38,200 | Per depositor limit |
The new law permits an advance equal to 40 monthly minimum wages, or 121.76 million, and sets the full guarantee at 75 minimum wages, equivalent to 228.3 million guaraníes. The minimum wage has been 3,044,000 guaraníes since 1 July 2026.
Payments began on Thursday afternoon for an unspecified number of impacted depositors. In the initial phase, funds will be deposited for clients without loans who can receive the money through an account at another bank or institution in Paraguay.
As payments proceed, beneficiaries will be identified in stages. The central bank states the process may not exceed five business days from 5 November, ending on Wednesday 11 November 2026.
Unresolved Questions
For balances exceeding the 228.3 million guaraníes ceiling, the central bank hasn’t given a repayment commitment, timeline or amount.
Under the fund’s rules, Ueno depositors with dollar accounts receive repayment in guaraníes. The central bank hasn’t said which exchange rate it will use for these conversions.
It was also not immediately clear whether Carlos Carvallo has been taken into custody following the order for his arrest.
