Paraguay’s President Santiago Peña has been removed from office following a banking crisis that froze the savings of millions of customers and triggered widespread protests, criminal investigations and impeachment proceedings.
Peña announced his resignation on Thursday, November 5, 2026, after the collapse of Ueno Bank, a major digital lender with business connections to him and his administration.
However, lawmakers declined to end the matter with his resignation and proceeded with impeachment proceedings over allegations of misconduct, conflicts of interest and failures in supervising the financial institution.
On Friday, November 6, Paraguay’s Senate voted unanimously to impeach Peña, removing him from office. Vice President Pedro Alliana subsequently took the oath of office as the country’s new president, assuming the remainder of the presidential term, which runs until August 2028.
The former president was subsequently placed under house arrest as prosecutors pursued investigations into his alleged connections with the failed lender.
Peña, who became president in August 2023 after winning elections under the conservative Colorado Party, denied wrongdoing.
Ueno Bank, had become one of Paraguay’s major financial institutions, serving approximately three million customers in a country of about 6.1 million people.
The Central Bank of Paraguay intervened in the institution on November 3, 2026, after investigations revealed that it had breached minimum solvency requirements.
The intervention suspended the bank’s operations, leaving millions of customers unable to access their deposits through its branches, mobile application and payment cards.
The institution reportedly held between $800 million and $850 million in public funds, including money belonging to government institutions and the country’s Social Security Institute (IPS).
The pension and healthcare institution reportedly had approximately $355 million deposited with Ueno, raising concerns about the exposure of public resources to the bank’s financial difficulties.
The crisis also affected businesses, pensioners and ordinary customers who relied on the lender for everyday transactions.
According to reports, the bank had expanded rapidly after receiving its banking licence in 2023, attracting customers through digital services, grocery cashback offers and partnerships with Paraguay’s national football team.
However, its rapid growth attracted scrutiny over its lending practices and connections to politically influential business interests.
Investigations by Paraguay’s Central Bank uncovered problems with Ueno’s loan portfolio, including lending to companies connected to the bank’s owners and executives.
Regulators identified poorly documented loans and transactions that raised questions about compliance with restrictions on related-party lending.
The investigation also uncovered expenses that the bank had incorrectly recorded as assets.
After regulators adjusted its financial statements and accounted for potential losses, Ueno’s capital fell below half the legally required minimum. The bank could no longer meet the country’s solvency requirements, prompting the Central Bank to initiate resolution proceedings.
The intervention exposed weaknesses in the lender’s financial position and raised questions about how it had expanded while maintaining compliance with banking regulations.
Authorities subsequently detained eight senior bank executives, including founder Miguel Vázquez and bank president Juan Manuel Gustale. Prosecutors also charged 27 bank officials and business associates with alleged offences including breach of trust and attempted fraud.
The allegations remain subject to judicial proceedings.
The financial investigation developed into a political scandal after lawmakers raised questions about Peña’s previous business interests in the institution.
The president had held shares in Ueno Holding, the parent company connected to the bank’s ownership group, Grupo Vázquez, until March 2025.
His business association with the conglomerate raised concerns about potential conflicts of interest, particularly because public institutions had deposited substantial funds with the lender during his administration.
Peña also appointed Carlos Carvallo, who previously led Financiera Ueno, the predecessor to Ueno Bank, as president of Paraguay’s Central Bank in 2023.
Carvallo’s appointment attracted scrutiny because the regulator was responsible for supervising the same financial institution he had previously led. He resigned on November 3 following the intervention of Ueno Bank, after Peña requested his departure.
Prosecutors subsequently issued an arrest warrant for the former central bank chief.
Opposition lawmakers accused Peña of influence peddling, failing to protect public funds and allowing conflicts of interest to compromise financial supervision.
The president rejected allegations of misconduct and maintained that his former investment did not mean he had improperly influenced government decisions.
The collapse triggered demonstrations in Paraguay’s capital, Asunción, as customers demanded access to their savings and accountability from government officials. Thousands of depositors, pensioners, workers and university students joined protests outside government institutions.
The crisis also affected employees of Grupo Vázquez, with some demonstrating over unpaid salaries and uncertainty surrounding their jobs.
Political pressure intensified after Horacio Cartes, a powerful figure within the ruling Colorado Party, withdrew his support for Peña and backed impeachment proceedings.
Facing growing opposition from lawmakers and members of his own political party, Peña announced his resignation in a video message on November 5.
“I have made the decision to submit my resignation as President of the Republic. I do so thinking of the stability of our country, social peace and the need to preserve our democratic institutions,” he said.
He also apologised to citizens, stating: “I also want to apologize to the people if I have failed them at any point. It was never my intention to betray the trust they placed in me.”
Peña said his priority was ensuring that Paraguayans who had deposited their savings with the financial institution recovered their money.
However, lawmakers proceeded with impeachment rather than allowing his resignation to conclude the political crisis.
On Friday, November 6, Paraguay’s Senate completed impeachment proceedings against Peña and voted unanimously to remove him from office.
Peña’s removal also exposed him to potential criminal prosecution without the protection associated with the lifetime Senate position that a regular presidential departure would have granted him.
The former president was placed under house arrest as prosecutors continued investigating allegations connected to the banking scandal.
Following the intervention, Paraguay’s authorities began arrangements to protect depositors and transfer customer accounts to other financial institutions.
The country’s deposit guarantee scheme protects individual deposits up to approximately $38,000.
Authorities also moved to facilitate payments to affected customers, particularly those who relied exclusively on Ueno for their banking services.
The Central Bank began arrangements to open accounts at alternative institutions for approximately 280,000 customers who previously banked only with Ueno.
However, the recovery of deposits exceeding the guaranteed amount depends on the bank’s resolution process and the recovery of its remaining assets.
